2008 (8) TMI 114 - AT - Service Tax

Whether service tax was leviable on transfer of technology, trademark etc., by the respondents to M/s. BMF Beltings Ltd. for manufacture and sale, by the latter, of certain goods, under the head Consulting engineer s service during the period from 1 -4-1997 to 31-3-2002 - that transfer of technical know-how would not fall under the category of consulting engineer s service for the purpose of levy of service tax - issue is no longer res integra & the same stands settled against the revenue

Summary

Issues:
1. Whether service tax was leviable on the transfer of technology, trademark, etc., under the head 'Consulting engineer's service'?
2. Applicability of service tax on the transfer of technical know-how and designs.

Issue 1:
The appeal dealt with the question of whether service tax was applicable on the transfer of technology, trademark, etc., under the category of 'Consulting engineer's service' as per the provisions of the Finance Act, 1994. The original authority imposed service tax and penalties on the assessee based on royalty received for the transfer of technology. The royalty rate was revised during the period under consideration. However, the first appellate authority set aside the decision of the original authority, leading to the revenue's appeal.

Issue 2:
The substantive ground of the appeal focused on whether the services provided by the assessee, involving the transfer of technical know-how, design, and drawings to another entity for manufacturing excisable products, fell within the scope of 'Consulting engineer' services liable for service tax. The learned SDR argued that the services rendered by the assessee should be considered under the category of 'Consulting Engineer' based on the broad definition of engineering disciplines. On the other hand, the counsel for the respondents contended that the transfer of technical know-how should not be subject to service tax under the 'Consulting engineer's service' category. The counsel cited relevant Tribunal decisions to support this argument, emphasizing that the issue was settled against the revenue.

In the final analysis, the Tribunal upheld the decision of the lower appellate authority, dismissing the revenue's appeal. The Tribunal concurred with the settled legal position that the transfer of technical know-how does not fall under the purview of 'consulting engineer's service' for the purpose of levying service tax. The cited case law, including Commissioner v. Toyoda Iron Works Co. Ltd., Lakshmi Machine Works v. Commissioner, and Commissioner v. Myco Ltd., supported the conclusion that the transfer of technical know-how is not subject to service tax under the specified category. Therefore, the Tribunal affirmed that the issue was no longer open for debate and stood settled against the revenue, leading to the dismissal of the appeal.