2008 (11) TMI 59 - AT - Service Tax

Transfer of technical know-how - Demand under category of Consulting Engineers - such activities are not coming within the purview of Consulting Engineer , it may come under Intellectual property service as introduced on 10.9.04 further, tribunal in various decisions held that recipient of the service of foreign company are not liable to service tax prior to 1.1.05 - nature of service, not examined by the adjudicating authority - impugned orders are set aside & matters are remanded back

Summary

Issues:
1. Service tax demand on appellants for technical know-how agreement.
2. Classification of service under 'Consulting Engineers' or 'Intellectual property service'.
3. Adjudication process and appellate orders.

Analysis:
1. The case involved a service tax demand on two appellants, one engaged in manufacturing excisable goods and the other a foreign company providing technical know-how. A show cause notice was issued proposing a tax demand for the period from 1999-2000 to 2002-2003. The Dy. Commissioner confirmed the tax demand and penalties, which was appealed. The Commissioner (Appeals) remanded the case for reconsideration. Subsequently, during the pendency of the appeals, a de novo adjudication order was passed confirming the tax demand and penalties, which was again upheld by the Commissioner (Appeals). The appellants challenged these orders before the Tribunal.

2. The main contention was whether the service provided by the foreign company fell under the category of 'Consulting Engineers' or 'Intellectual property service'. The advocate argued that the activities did not fall under 'Consulting Engineer' and could be classified as 'Intellectual property service' introduced in 2004. It was also highlighted that previous tribunal decisions exempted recipients of services from foreign companies from service tax before 2005. The Tribunal found a factual dispute regarding the nature of service, which was not examined by the adjudicating authority. The advocate made various submissions on this issue.

3. After hearing both parties, the Tribunal observed that the adjudicating authority did not examine the nature of service in detail. Therefore, the impugned orders were set aside, and the matters were remanded back to the adjudicating authority for a fresh decision after considering the submissions of the appellants. The Tribunal emphasized that proper opportunity of hearing must be given to the appellants before passing any order. Consequently, all appeals were allowed by way of remand.

This detailed analysis of the judgment highlights the issues of service tax demand, classification of services, and the adjudication process, providing a comprehensive understanding of the legal proceedings and the Tribunal's decision.