AAR rules that service fee payable by Dr Reddy’s Laboratories Limited (‘applicant’) to its Russian subsidiary (‘DRL Russia’) under the Service Agreement for providing product promotion services, not FTS either u/s 9(1)(vii) of the Act or under Article 12 of India-Russia DTAA; Rejects Revenue’s stand that medical representatives of DRL Russia were providing consultancy services to applicant, notes that “medical representatives of DRL Russia merely promote the goods by way of meeting doctors and pharmacies and their activities are executory in nature since such services do not entail the rendering of advice to the applicant.”, further “There is no evidence to suggest that the reports prepared by medical representatives have been utilized by DRL India in respect of brand promotion or for deciding the strategy for sale of goods in Russia.”; Relies on SC ruling in GVK Industries to hold that ‘consultation’ entails deliberations, consideration, conferring with someone, conferring about or upon the matter, as there is no evidence to suggest that applicant is consulting DRL Russia in pursuance of the agreement for promotion of goods, it cannot be considered as providing consultancy services; Distinguishes Revenue’s reliance on AAR ruling in case of International Hotel Licensing Company to contend that services provided in the form of advertising, marketing promotion, sales program amounted to rendering of managerial and consultancy services, holds that reports prepared by DRL Russia are merely statistical in nature and do not support this stand, accordingly rules that the services relating to promotion of goods cannot be categorized as consultancy services; Also rejects Revenue’s alternate stand that services rendered pursuant to the service agreement were managerial services, clarifies that the job of medical representatives is merely to meet doctors and pharmacies, “Such jobs cannot be said to be managing the affairs of DRL India in Russia.”: :AAR
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