Aurobindo Pharma Ltd. Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)
Summary: The CESTAT Hyderabad allowed the appeal filed by Aurobindo Pharma Ltd. and set aside Service Tax demands confirmed under the categories of “Banking and Other Financial Services” and “Scientific or Technical Consultancy Services”. The first dispute concerned charges deducted by foreign banks while transmitting export proceeds from overseas customers through the appellant’s Indian bankers.
The Tribunal held, following Green Ply Industries Ltd. and Raj Petro, that there was no service provider-service recipient relationship between the appellant and foreign banks merely because certain charges were deducted from export proceeds. The foreign banks were part of the banking arrangement for transmission of funds, and there was no evidence that the appellant had engaged them or was liable to pay consideration to them. The demand under reverse charge was therefore unsustainable.
The second dispute concerned payments to M/s DADA Consultancy and M/s Pharphe Dr. D.R. Iban for compiling clinical and non-clinical overviews and regulatory documentation required for obtaining pharmaceutical marketing approvals in European countries. Revenue classified the services as “Scientific or Technical Consultancy Services”.
The Tribunal relied upon its earlier decision in the appellant’s own case and IPCA Laboratories Ltd., holding that regulatory services undertaken to obtain permissions or registrations for pharmaceutical products cannot merely because they involve scientific information be classified as Scientific or Technical Consultancy Services.
