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ST - to market agrochemicals in USA appellant sourced technical data readily available from company situated in USA - data is available off shelf to all for price - activity prima facie cannot come within purview of BAS under reverse charge - stay granted: CESTAT

By TIOL News Service

MUMBAI, MAR 12, 2013: THE appellant wanted to market agro-chemicals in the United States of America. In order to do that, they needed to obtain registration from United State Environmental Protection Authority (USEPA). To obtain this registration, they were required to provide technical data/information about the products.

This information they obtained from the various other companies in USA by paying Data Access Fee. The department was of the view that this acquisition of technical data is liable to Service Tax under reverse charge mechanism and in the category of ‘Business Auxiliary Service' inasmuch as it constitutes promotion or marketing/sale of goods of the appellant in the USA.

The SCN was issued and the Commissioner of Service Tax (Adjn.) could not resist confirming the Service Tax demand of Rs.3,01,40,045/- for the period from 18.04.2006 to 30.06.2009 along with imposition of equivalent penalty and interest thereon.

Before the CESTAT with a Stay application, the applicant submitted -

++ The appellant obtained technical data from the company based in USA, which are readily available. It is not as if that this data was created for the appellant. Test was conducted by the company in the USA in respect of similar products to study the effects on the environment. The same data was useful for the appellant also. Thus, the activity would not come under the purview of Business Auxiliary Service which envisages service to promote or market or sell the goods on behalf of the appellant.

++ No such activity has been undertaken by the foreign company in their case and, therefore, the demand of Service Tax under ‘Business Auxiliary Service' is not sustainable in law.

The Revenue representative did the usual - reiterating the findings of the adjudicating authority.

The Bench observed -

"5.1. We observe that in this case, the appellant has bought/procured technical data available from the company situated in USA. It is not a case where the technical data was generated by testing the products of the appellant and studying their effects on environment. The said testing was conducted much before the product was manufactured and it was done not keeping in mind the appellant's requirement. The data is available off the shelf to all for a price. Therefore, we do not agree with the findings of the adjudicating authority that the access of data by the appellant comes within the purview of "Business Auxiliary Service."

Holding that there was a prima facie strong case in favour of the appellant, the CESTAT granted waiver of pre-deposit of the adjudged dues and stayed the recovery during pendency of the appeal.

(See 2013-TIOL-422-CESTAT-MUM)


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