SCIENTIFIC AND TECHNICAL CONSULTANCY

Date of Introduction: 16.07.2001 vide Notification No.4/2001-ST dt.09.07.2001

Definition:

Section 65(60) defines “scientific and technical consultancy” as any advice, consultancy, or scientific or technical assistance, rendered in any manner, by a scientist or a technocrat, or any science or technology institution or organization, to a client, in one or more discipline of science or technology.

Taxable events and scope of service:

The taxable service has been defined in clause 72 (za) of section 65 as “any service provided, to a client, by a scientist or a technocrat, or any science and technology institution or organization, in relation to scientific or technical consultancy”. 

The taxable service should be understood in the context of its commonly understood meaning and scope. For instance, it would cover consultation, advice or technical assistance provided by a scientist or a technocrat or a science or technology institution on any issue relating to any branch of science and technology. Such consultation may be in the nature of an expert opinion/advice in regard to scientific or technical feasibility or any other scientific or technical aspect of a project, process or design, recommending an apt technology, suggestion for improvement in existing technology or process, providing consultation on any technical problem or about new technology, etc.

Public funded research institutions like CSIR, ICAR, DRDO, IITs and IISc., Regional Engineering Colleges etc, which are exempt from payment of income tax are covered under the Service Tax and Service Tax is liable to be paid when any scientific or technical consultancy service is rendered whether by public funded institutions or by private agencies.

Scientific or technical consultancy is provided to a government department/public sector undertaking for which consultation fees are received, then Service Tax would be applicable.

(Ministry’s F.No.B-11/1/2001-TRU dt. 09.07.2001)

Value of Taxable Service:

Value of Taxable service shall be the gross amount charged by the service provider for such service rendered by him. (Section 67 of Finance Act, 1994 as amended)

Exemption and Exclusion:

1. Services rendered by doctors, medical colleges, nursing homes, hospitals, diagnostic and pathological labs, etc. would not come under the purview of levy of Service Tax as in common parlance, these categories of service providers are not known as scientists or technocrats or science or technology institutions or organizations.

2. Mere testing will not attract Service Tax. However, in case testing is an integral part of the consultancy, then such activity is part and parcel of the taxable service and no abatement of any kind admissible.

3. Public funded research institutions, which receive grants or aids from the Government for conducting research /project works are not covered under the purview of Service Tax as no service is rendered to any one. However, if they render service to anyone on payment basis, Service Tax will be payable on such services. 

(Ministry’s F.No.B-11/1/2001-TRU dt. 09.07.2001)

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