INDIAN INSTITUTE OF CHEMICAL TECHNOLOGY Vs. THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX

JUDGEMENT

(1.) THESE appeals have been filed against Order -in -Original No. 01/2008 -ST dated 31.1.2008 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad -III Commissionerate, Hyderabad. In fact, one of the appeals is filed by the revenue against the same impugned Order -in -Original.

(2.) SHRI Moheb Ali, learned Consultant appeared on behalf of the assessee and Mrs. Joy Kumari Chander, learned JCDR for the revenue.

(3.) FIRST , we shall deal with the assessee's appeal and thereafter, we will take up the revenue's appeal. M/s. Indian Institute of Chemical Technology (IICT), Hyderabad took Service Tax Registration in the year 2002 under the category of 'Scientific and Technical Consultancy Services', which is taxabale. However, the officers of the DGCEI conducted certain investigations and it was found that the assessee had not discharged their Service Tax liability on some of the consultancies undertaken by them. Consequently, proceedings were initiated against them by way of issue of show cause notice. Statements from the concerned officers of the IICT and also some of the customers of the assessee were taken. On the basis of the investigation, it was noticed that there was escapement of Service Tax for the period from 16.7.2001 to 13.5.2003 and also from 14.5.2003 to 9.9.2004. During the former period, the Service Tax rate was 5% and in the second period, the rate of Service Tax was 8%. Taking into account, the value of the services rendered during the above two periods, the Service Tax liability for the two periods were calculated at Rs. 60,92,708/ - and Rs. 77,75,753/ -, respectively. The assessee is a laboratory under the Council of Scientific and Industrial Research, which is also a part of the Ministry of Science and Technology. They take up research and development works in various branches of science. They had classified their R & D projects as under on the basis of instructions received from their headquarters. (A) Sponsored Projects (b) Collaborative Projects (c) Grant -in -aid Projects (d) Composite Projects. Consequent to the investigation, show cause notice dated 21.2.2006 was issued proposing confirmation of demand of Rs. 1,38,68,461/ - for the above mentioned period of 16.7.2001 to 9.9.2004. Interest was demanded under Section 75. Penalties were proposed under Section 76 and 77.