Annexure I

Scientific and technical consultancy service
1. 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 organisation, to a client, in one or more discipline of science or technology. 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 organisation, in relation to scientific or technical consultancy".

2. 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. Some of the specific issues raised and clarifications thereon are given below.

3. Points for clarification:

Point raised for clarification	Clarification
Whether services rendered by doctors, medical colleges, nursing homes, hospitals, diagnostic and pathological labs, etc. would come under the purview of the proposed levy.	In common parlance, these categories of service providers are not known as scientists or technocrats or science or technology institutions or organisations. They will not be covered under service tax.
Whether 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.	Yes. 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.
Whether testing services will be covered under the proposed levy?	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.
Many public funded research institutions receive grants or aids from the Government for conducting research /project work. Whether such activities would be covered under the levy?	In the facts of this case, no service is rendered to any one. Hence the question of payment of service tax does not arise. However, if they render service to anyone on payment basis, service tax will be payable on such services.
Whether the service tax will be leviable on consultancy provided to government departments, public sector undertakings?	If scientific or technical consultancy is provided to a government department for which consultation fees are received, then service tax would be applicable.