2012 (8) TMI 686 - HC - Service Tax

Demand of service tax - transfer of technology by a foreign company cannot be brought within the ambit of Consulting Engineer Service Held that - As the service provider is a foreign company, the Finance Act, 1994 is not applicable to him and he is not liable to pay service tax

Summary

Issues:
1. Whether the transfer of technology by a foreign company falls under the category of 'Consulting Engineer Service'?

Analysis:
The High Court of Karnataka heard an appeal filed by the revenue challenging the order of the Customs, Excise, and Service Tax Appellate Tribunal. The main issue raised was whether the transfer of technology by a foreign company should be considered as 'Consulting Engineer Service.' The Appellate Authority had ruled against the revenue, citing previous decisions. Subsequently, the Tribunal, after considering the arguments of both parties, upheld its decision based on existing judgments. The revenue, dissatisfied with this outcome, filed the present appeal.

The Court examined whether the Tribunal's rejection of the revenue's argument regarding the classification of technology transfer by a foreign company under 'Consulting Engineer Service' was a settled matter. It referenced a previous judgment and a judgment of the Court in a related case. The Court noted that as the service provider was a foreign entity, the Finance Act, 1994 did not apply, making the provider not liable to pay service tax. The revenue acknowledged this fact, leading to the insertion of Section 66A in the Finance Act, 1994, shifting the tax liability to the service recipient. Relying on the precedent set in the mentioned judgment, the Court concluded that the appeal lacked merit.

In light of the above analysis, the Court dismissed the appeal, affirming the position that the transfer of technology by a foreign company does not fall under the purview of 'Consulting Engineer Service' for the purpose of service tax liability.