24 Sep 2023 9:30 AM GMT
The Punjab and Haryana High Court has held that innovation and development services provided to a German company amount to an export of services.The bench of Justice Ritu Bahri and Justice Manisha Batra observed that the petitioner/assessee does not carry out any marketing of the products of Fresenius Kabi Deutschland GmbH Germany (FKDG) nor any product is delivered by FKDG to it. The...
The Punjab and Haryana High Court has held that innovation and development services provided to a German company amount to an export of services.
The bench of Justice Ritu Bahri and Justice Manisha Batra observed that the petitioner/assessee does not carry out any marketing of the products of Fresenius Kabi Deutschland GmbH Germany (FKDG) nor any product is delivered by FKDG to it. The activities performed by the petitioner are original activities, and for doing the same, it has been charging costs from FKDG. Therefore, it cannot be stated to be an intermediary of FKDG. The services provided by it to FKDG cannot be stated to be intermediary services.
The petitioner/assessee is one of the leading pharmaceutical companies engaged in the manufacture of anti-cancer drugs as well as innovation and development in the field of oncology drugs, maintaining global standards. The petitioner is an entity constantly striving to grow to the global level on the strength of its deep-rooted values and key strategic investments in the field of innovation and development related to oncology drugs.
The petitioner had entered into agreements for the distribution of products as well as innovation and development services with various companies across the world, including FKDG, which is incorporated in Germany under German law. The petitioner had entered into various agreements with the FKDG, Germany, for providing services.
The petitioner has been exporting services under an agreement with FKDG for a long time, i.e., from 2011 onwards. The Assistant Commissioner, in its order dated July 29, 2016, has held that the service provided by the petitioner is an export of service, and this order was binding on the respondents and could not be re-considered when no appeal has been preferred against the earlier assessment.
Under the Service Tax regime, a show cause notice was issued and adjudication was conducted by the Assistant Commissioner, Service Tax, Division XVIII, GGN, and one of the questions posed in the adjudication was whether the assessee has exported the services as per the provisions of Export of Service Rules 6A or not.
While answering the question, the Assistant Commissioner considered the question of the export of services and the agreements entered by the petitioner with FKDG. It was held that the petitioner fulfils all the conditions as per Section 6A of the Export of Service Rules.
The question as to whether the petitioner is an exporter of services or not has reached finality and is binding on the respondent.
The court set aside orders and held that the writ petitioner is entitled to seek a refund for the period from July 2017 to March 2019 from the department.
Counsel For Appellant: Sandeep Goyal
Counsel For Respondent: Gurinderjit Singh
Case Title: M/s Fresenius Kabi Oncology Ltd. Versus Union of India
Case No.: CWP-17437-2021
Click Here To Read The Order