2007 (8) TMI 62 - AT - Service Tax

Demand (Service tax) - Revenue demand for service tax under Consulting Engineer from assessee on the ground that assessee was a foreign company transferred the technology to the Indian company for valuable consideration - Held that demand not sustainable

Summary

Issues:
1. Whether the Service Tax raised under the heading of 'Consulting Engineer' should be dropped due to the assessee being a foreign company transferring technology to an Indian company.
2. Whether the activities of the appellants fall under the purview of Consulting Engineer for Service Tax purpose.

Analysis:
1. The Commissioner (A) found that the appellants, a foreign company, formed a joint venture with an Indian company in the automobile manufacturing field. The appellants held a significant share in the joint venture, indicating a substantial interest in its profits. The Commissioner agreed that the relationship between the appellants and the local company was more than just a consultant-client relationship. The appellants transferred technology to the Indian company for manufacturing automobiles, collected Technical assistance fee, and ensured product quality. The Commissioner concluded that the activities did not constitute 'advice, consultancy, or technical assistance' in the engineering discipline. Citing a relevant case law, the Commissioner held that the appellants' activities did not fall under the purview of Consulting Engineer for Service Tax purposes.

2. The Tribunal considered the appeal in light of previous judgments such as Biocon Ltd. v. CST, Bangalore and CCE, Bangalore v. M/s. Toyoda Iron Works Co. Ltd. The Tribunal noted that Service Tax is not leviable when a foreign company transfers technology to an Indian company for valuable consideration. Referring to numerous Tribunal rulings deciding the issue in favor of the assessee, the Tribunal dismissed the appeal, stating that there was no merit in challenging the dropping of Service Tax under the 'Consulting Engineer' category.

In conclusion, the Tribunal upheld the decision to drop the Service Tax raised under the 'Consulting Engineer' category due to the foreign company's transfer of technology to the Indian company. The activities of the appellants were deemed not to fall under the purview of Consulting Engineer for Service Tax purposes based on the nature of the technology transfer and ongoing technical support provided. The appeal was dismissed in line with established precedents and rulings favoring the assessee in similar cases.