Applicability of service tax

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CA Sandeep Biradar

CA Practice

42 Points Posted on 09 June 2014

Hi guys Need your inputs. There are two companies a) ABC & Co (Foreign company) and b) XYZ & Co (Indian Company). The ABC gives a grant to xyz for some research which is under the preview of Foreign Contribution Regulation Act (FCRA), 2010. The patent if any derived out of the research project will belong to xyz only. But the grant agreement has one clause where in the ABC will have a royalty free access to the patented technology. So my question is whether the service tax department will argue this as a service contract and not as grant because the ABC company has a royalty free access to the technology developed. If at all the department argues this as a service contract, can we claim this as export of service? Thanks Sandeep

Replies (2)

Harendra Kumar

Tax Advisor

1326 Points Posted on 10 June 2014

Some interpretation required in this regard. Firstly it is an export service or may be taxable services or also your liability to be created under Business Support Services i.e. is taxable service. So that in my view you have to vide explanation required for submission then we are clarify that what circumstances will be raised. Hope you are not facing a Show Cause Notice in this regard. Plz brief your all services received by you or raised by you only in brief.

Hope you got the things.