Custom, Excise & Service Tax Tribunal
Nektar Therapeutics (India) Pvt. Ltd vs Commissioner Of Customs, Central ... on 30 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/21067/2014-DB [Arising out of Order-in-Original No. 104/2013 dated 30/12/2013 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad-IV ] For approval and signature: HON'BLE Mrs. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Nektar Therapeutics (India) Pvt. Ltd. Mr. Raman Akella, Executive Dir. Business Operations, Survey No.101/102, Lalgadi Malakpet Village, Genome Valley, Shamirpet Mandal, Ranga Reddy Dist., Hyderabad Andhra Pradesh Appellant(s) Versus Commissioner of Customs, Central Excise and Service Tax Hyderabad-IV Posnett Bhavan, Tilak Road, Ramkote, Hyderabad 500 001 Andhra Pradesh Respondent(s)
Appearance:
Mr. Sandeep Chilana and Ms. Aurica Bhattacharya, Advocates Amarchand Mangaldas Suresh A. Shroff & Co., 216, Okhla Industrial Estate, Phase-III, New Delhi 110 020 For the Appellant Mr. A.K. Nigam & Mr. N. Jagdish, AR For the Respondent Date of Hearing: 30/03/2015 Date of Decision: 30/03/2015 CORAM:
HON'BLE Mrs. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER Final Order No. 20928 / 2015 Per : B.S.V. MURTHY Appellant is engaged in research and development activities in the field of pharmaceutical development which includes process chemistry, formulation development, bioanalytical services, analytical development, research biology etc. Services are rendered exclusively to their parent company Nektar Therapeutics Inc, USA (Nektar USA) a company incorporated in USA. Nektar USA is a biopharmaceutical company.
2. Appellant entered into a Master Service Agreement in April 2007 according to which they were required to provide various research and development services which are under the categories mentioned above. After the testing etc. is done in India, it is the claim of the appellants that the Executives/Officers of the company meet the clients, discuss the report and thereafter further testing etc. is required otherwise if the report is accepted the matter ends.
3. Treating the services rendered as entirely performed in India and therefore not amounting to export of services, proceedings were initiated against the appellant to demand service tax on the services rendered amounting to Rs. 13,68,68,639/- (Rupees Thirteen Crores Sixty Eight Lakhs Sixty Eight Thousand Six Hundred and Thirty Nine only). Besides demanding the tax interest has also been demanded and penalty has been imposed. In addition to this treating the services of Technical Testing and Analysis rendered by the appellants as performed in India not amounting to export, the appellants were required to pay some additional amount of Rs. 18,98,626/- (Rupees Eighteen Lakhs Ninety Eight Thousand Six Hundred and Twenty Six only) under the taxable service category of Management and Business Consultancy and Rs. 2,68,105/- (Rupees Two Lakhs Sixty Eight Thousand One Hundred and Five only) under Information Technology Software Service. In respect of these two services the demand has been made with interest on the ground that appellants have imported the services. The learned counsel submitted that appellants are not contesting this demand and the entire demand with interest and 25% towards penalty has been paid within 30 days from the passing of the order-in-original thereby discharging the entire liability arisen as a result of the demand in respect of these two services.
4. Learned counsel on behalf of the appellant submitted that the issue is no longer res integra and is covered by the decision of this Tribunal in the case of CST, Ahmedabad Vs. B.A. Research India Ltd. reported in [2010 (18) S.T.R. 439 (Tri.-Ahmd.)]. Appeal filed by the Revenue against this decision was rejected by the Honble High Court of Gujarat on the ground of maintainability. Instead he also submits that in the case of M/s. Lambda Therapeutic Research Ltd. Vs. CST, Ahmedabad, Commissioner has passed an order taking a view that the services has to be considered as exported and no tax is liable in similar circumstances. According to me it shows that the Revenue has accepted the decision in the case of B.A. Research India Ltd. and did not challenge the same. Besides the above two decisions he also refers to several other decisions to support the submission that the issue has been considered in many cases and decided in favour of the appellants.
a) CST, Ahmedabad vs. B.A Research India Ltd. [2013 (31) S.T.R. 663 (Guj.)]
b) C3l Consultants India Pvt. Ltd. vs. CCE & ST, Hyderabad [2014 (3) TMI 736-CESTAT BANGALORE: (2014 (35) S.T.R. 556 (Tri.-Bang.)]
c) CST, Bangalore Vs. Apotex Research Pvt. Ltd. [2015 (1) TMI 229 - CESTAT-BANGALORE
d) United States Pharmacopeia India Pvt. Ltd. Vs. CCE & C, Hyderabad [2014 (36) S.T.R. 98 (Tri.-Bang.)]
5. Learned AR agrees that the issue is covered by the decision of the Tribunal in the case of B.A. Research India Ltd.
6. After going through the facts and records and considering all the submissions made by both sides, it is quite clear that the issue is covered by the precedent decisions of this Tribunal. Moreover in this case even though quality tests were conducted in India, only after the report is accepted by the clients abroad, service gets completed. In the case of B.A. Research India Ltd. the Tribunal had taken a view that this amounts to part performance in abroad and part performance in India and in such cases according to definition of Export of Service Rules, this has to be considered as export. Under these circumstances, appeal has to be allowed with consequential relief, if any, to the appellants and accordingly appeal is allowed.
(Order pronounced and dictated in open court) (B.S.V. MURTHY) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER iss