2014 (2) TMI 1041 - AT - Service Tax

Stay application - Demand of service tax - Intellectual property service - Transfer of licence for production of certain aircrafts and equipments and transfer of technology - Held that - confirmation of demand under IPR category is justified. Similarly, the appellant has not disputed that the engineers of foreign parties came to their premises for giving advice and consultancy for the manufacture of aircrafts. As such, we prima facie agree with the Adjudicating Authority that the demand on the said count is also sustainable - demands stand raised by invoking the longer period of limitation. The Adjudicating Authority has himself extended the benefit of Section 80 in respect of penalties to be imposed on the appellant in terms of various Sections. If that be so, there cannot be any malafide or suppression on the part of the appellant so as to invoke the longer period of limitation - Conditional stay granted.

Summary

Issues:
1. Demand under Intellectual Property Rights (IPR) category
2. Demand under Consulting Engineer category
3. Invocation of longer period of limitation

Analysis:
1. Demand under Intellectual Property Rights (IPR) category:
The Tribunal noted that a similar issue had been addressed in a previous stay order concerning the appellant's case. The Tribunal observed that services received by the appellant from a foreign company for the transfer of license and technology for aircraft production could fall under IPR services. The Tribunal agreed with the Adjudicating Authority that the demand under the IPR category was justified based on the facts presented.

2. Demand under Consulting Engineer category:
The appellant did not dispute that foreign engineers had provided advice and consultancy at their premises for aircraft manufacturing. The Tribunal found this aspect to be sustainable and agreed with the Adjudicating Authority regarding the demand under the Consulting Engineer category. However, the Tribunal noted that the demand was raised invoking the longer period of limitation.

3. Invocation of longer period of limitation:
The Adjudicating Authority had extended the benefit of Section 80 in terms of penalties imposed on the appellant, indicating no malafide intent or suppression on the appellant's part. The Tribunal held that since penalties were being mitigated, there was no basis for invoking the longer period of limitation. Consequently, the Tribunal directed the appellant to deposit a specific amount within a stipulated time frame, subject to which the pre-deposit of the balance amount would be dispensed with, and recovery stayed.

This judgment clarifies the Tribunal's findings on the demands raised under the IPR and Consulting Engineer categories, as well as the application of the longer period of limitation. The decision provides insights into the Tribunal's reasoning and approach in determining the justifiability of demands and the implications of limitation periods in tax matters.