2007 (12) TMI 194 - AT - Service Tax

Appellant submitted that service tax on whatever amount was paid by the assessee to their collaborators as technical assistance fee for the technical assistance rendered by the latter in India was paid by them, but this aspect was overlooked by the revisional authority appellant further pleaded that transfer of technical know-how was held to be not chargeable to service tax in the category of consulting engineers service, in a plethora of cases - Stay granted

Summary

Issues:
Demand of service tax on technical know-how fee, running royalty, and technical assistance fee paid to foreign collaborators.

Analysis:
The Appellate Tribunal CESTAT, CHENNAI, consisting of Members P.G. Chacko and P. Karthikeyan, heard the case where the Commissioner confirmed a demand of service tax amounting to Rs. 13,85,755 against the appellants for the period between 16-8-2002 to 31-3-2004, along with penalties. The demand was based on the gross amount of technical know-how fee, running royalty, and technical assistance fee paid by the assessee to their foreign collaborators during the mentioned period. The original authority had initially rejected the proposals in the show-cause notice, but the revisional authority upheld the demand categorizing it as 'consulting engineers' service. The learned counsel argued that the service tax on the 'technical assistance fee' paid by the assessee for services rendered in India was already paid, which was not considered by the revisional authority. Additionally, it was highlighted that the transfer of technical know-how was not chargeable to service tax under the category of 'consulting engineers' service, as seen in various precedents cited by the counsel, including Turbo Energy Ltd. v. CCE, Chennai-III and Rane Brake Linings Ltd. v. CCE, Chennai-I.

The Tribunal noted that some of the cited orders were stay orders where a prima facie case was found for the assessees in similar factual circumstances. After hearing the arguments from both sides, the Tribunal found a prima facie case in favor of the appellants. Consequently, the Tribunal granted a waiver of pre-deposit and a stay of recovery concerning the service tax amounts and penalties. The decision was dictated and pronounced in open court by the Members.