2013 (1) TMI 658 - AT - Service Tax

Demand - Consulting Engineering Service - Assessee a 100% EOU Division transfer the technical know-how - Appellants have never provided any service and no consideration for the service have been received - Appellants made a debit entry for the services to be provided in future - Held that - As neither there is service provided nor any consideration have been received. Moreover, supply of technical know-how cannot be taxed under Consulting Engineering Service , therefore, the impugned orders are set side. In favour of assessee

Summary

Issues:
Demand of service tax under the category of "Consulting Engineering Service" for transfer of technical know-how without actual provision of service or receipt of consideration.

Analysis:
The appellants appealed against an order demanding service tax for an agreement with a client for transfer of technical know-how. The agreement allowed the client to seek advice from the appellants, but no services were actually provided. The Revenue claimed service tax based on a debit entry in the appellants' books for future services. The appellants contended that as no service was rendered, they are not liable for service tax. The Tribunal noted that no service was provided, no consideration was received, and the demand was for a period prior to the levy of service tax. Citing legal precedents, the Tribunal held that making a book entry does not constitute service provision. It referenced a Supreme Court ruling stating that service tax cannot be levied if no service is rendered. Additionally, it highlighted a High Court decision stating that technical know-how supply cannot be taxed under "Consulting Engineering Service." Consequently, the impugned orders were set aside, and the appeals were allowed.

The Tribunal emphasized that the appellants did not provide any service, did not receive any consideration, and the demand was for a period before the service tax levy. Legal precedents were cited to support the conclusion that making a book entry does not equate to service provision. The Tribunal referenced a Supreme Court ruling stating that service tax cannot be levied in the absence of service provision. It also highlighted a High Court decision stating that technical know-how supply cannot be taxed under the category of "Consulting Engineering Service." Therefore, the impugned orders were set aside, and the appeals were allowed.

In conclusion, the Tribunal found that the appellants neither provided any service nor received any consideration for the period in question. Citing legal precedents, it established that making a book entry does not constitute service provision. Referring to relevant court decisions, the Tribunal ruled that technical know-how supply cannot be taxed under the category of "Consulting Engineering Service." As a result, the impugned orders were set aside, and the appeals were allowed with any consequential relief.