Custom, Excise & Service Tax Tribunal
Dr Reddy S Laboratories Ltd vs Visakhapatnam - G S T on 27 June, 2018
(1)
Appeal No: ST/30396, 30461 & 30473/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - I
Appeal No. Appellant(s) Respondent(s) Order-in-Appeal No.
Dr Reddy's CCT, VIZ-EXCUS-001-APP-
ST/30396/2018 Laboratories Visakhapatnma - 192-17-18
Ltd G.S.T dt.29.12.2017 passed
by CCCE & ST,
Visakhapatnam
ST/30461 & VIZ-EXCUS-001-APP-
30473/2018 -do- -do- 193-194-17-18
dt.24.01.2018 passed
by CCCE & ST,
Visakhapatnam
Appearance for Appeal Nos.ST/30461 & 30473/2018:
Shri B. Seshagiri Rao, Advocate for the Appellant.
Smt B.V. Siva Naga Kumari, Commissioner/AR for the Respondent. Appearance for Appeal No.ST/30396/2018:
Shri B. Seshagiri Rao, Advocate for the Appellant. Shri Dass Thavanam, Superintendent/DR for the Respondent. Coram:
Hon'ble Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 27.06.2018 Date of Decision: 27.06.2018 (2) Appeal No: ST/30396, 30461 & 30473/2018 FINAL ORDER No. A/30728-30730/2018 [Order per: P.VENKATA SUBBA RAO]
1. These appeals are filed against Orders-in-Appeal Nos. VIZ-EXCUS-
001-APP-192-17-18 dated 29.12.2017 and VIZ-EXCUS-001-APP-193-194- 17-18 dated 24.01.2018. Heard both sides and perused the records.
2. The appellants herein are an SEZ unit and they filed refund claims in terms of Notification No.12/2013-ST dated 01.07.2013 in respect of the service tax paid on services used for the authorized operations of SEZ unit as approved by the unit approval committee. With respect to the Order-in- Appeal No.VIZ-EXCUS-001-APP-192-17-18, the lower authority vide his Order-in-Original sanctioned refund claim of Rs.3,24,100/- and rejected an amount of Rs.22,00,615/- on the following grounds:
(a) Rs.4,58,892/- was filed beyond one year from the payment of service tax.
(b) Rs.14,237/- on the ground that the appeals were not related to their unit.
(c) Rs.17,27,486/- on the ground that the appellants have claimed refund against scientific or technical consultancy services which was paid under reverse charge mechanism and on verification of the challan enclosed with the invoice it was found that no payment is made under the category of 'scientific and technical consultancy services'.(3)
Appeal No: ST/30396, 30461 & 30473/2018
3. Aggrieved, the appellant appealed to first appellate authority who allowed the refund of Rs.4,58,892/- mentioned above but has rejected the refund of the other two amounts mentioned above. As far as the amount of Rs.17,27,486/- is concerned, the first appellate authority held that the appellant could not link up the payment made under business auxiliary services to the relevant invoice and had not even during the appeal, explained what service was received and how it is categorized as scientific and technical consultancy service and why they are arguing that it falls under business auxiliary services. Since the exemption notification is conditional notification, only on fulfilment of the conditions and on satisfaction that the services were consumed wholly within the SEZ unit can the refund be allowed. In their Appeal No.ST/30396/2018, the Learned Counsel for the appellant prayed that the Order-in-Appeal may be set aside in so far as it relates to the rejection of the refund of Rs.17,41,723/- and he did not press for other amount of Rs.14,237/-. He submitted that they have been issued licenses to manufacture drugs viz., a) Canagliflozin; b) Dapagliflozin and c) Posaconazole IH. The invoices issued by the service provider, indicates the description of their service as Scientific/Technical consultancy services. As there is no dispute regarding the receipt of service and its utilization which are authorized operations and payment of service tax on the above, the rejection of refund is not justified.
4. As far as the Appeal Nos.ST/30461/2018 and ST/30473/2018 are concerned, the first appellate authority rejected refund of Rs.67,980/- +Rs.3,39,900/- which were paid as retainership fee on the ground that the impugned service is not mentioned in the list approved by the UAC. The assessee asserts that the service rendered was actually consulting (4) Appeal No: ST/30396, 30461 & 30473/2018 engineering service and the consultant indicated the nature of service as retainership service.
5. Learned Departmental Representative, on the other hand, reiterated the arguments made in the Order-in-Appeal and asserted that the refund under the notification is a conditional one and unless the conditions are fulfilled, the appellant cannot claim refund. Since the retainership service as indicated in the invoice is not an approved form of service by Unit Approval Committee, no refund of that amount can be given to the appellant. It is also his assertion that once the invoice mentions a particular service as having been rendered, it is not up to the recipient of the service to change the nature of service or dispute the classification of the service in order to file the refund claim. In this case, since the consultant has mentioned the nature of the service rendered as retainership service, the same cannot be changed by the appellant to claim it as scientific and technical consultancy services. He relied on the order of Learned Tribunal in the case of Rajasthan State Mines and Minerals Ltd [2017 (3) GSTL 463 (Tri.-Del.)] in which it was categorically held that "the recipient of service has no locus standi to change classification of service than on what was paid by the service provider".
6. I have considered the arguments on both sides and perused the records. I find that there is no service in the nature of "retainership service". Retainership, as is understood in the market parlance, is a form of payment for service; either the service provider gets paid for each item of work or he gets paid on a periodical basis certain amount (called as retainership) so that he can make his services available as and when required. The retainership could be for any service such as consultancy, lawyers, technical (5) Appeal No: ST/30396, 30461 & 30473/2018 experts, etc. Unless the nature of the service rendered is clear and the service tax paid is also clear, it cannot be determined whether the appellant in this case will be entitled to refund of service tax or not. This is a factual matter which needs to be verified. As far as the Appeal No.ST/30396/2018 is concerned it also needs to be verified whether the nature of services rendered is scientific and technical consultancy services or not. I, therefore, find it fit to remand the matter back to the original authority to examine the nature of services rendered and decide on merits. The appellant can produce all the evidence which he has to show the category under which the service tax was paid by their service providers to their jurisdictional service tax authorities and how they are eligible for refund of service tax paid on such services during the relevant period in terms of their approvals from the UAC.
7. These appeals are allowed by way of remand to the original authority.
(Operative Part of this Order was pronounced on conclusion of hearing) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) Veda