2007 (1) TMI 175 - AT - Service Tax

Consulting Engineer Services - whether Service Tax is to be levied on the royalty and technical services fee paid by the Indian Companies to their foreign counterparts for transfer of technical documents including know-how, patents, trademarks etc. - issue is settled in assessee s favour in decisions of all the Benches of the Tribunal, therefore, respectfully applying the ratio of the cited judgments, the impugned order is set aside - stay application and the appeals are allowed

Summary

Issues: Whether Service Tax can be levied on royalty and technical services fee paid by Indian companies to foreign counterparts for transfer of technical know-how.

Analysis:
1. The issue in this appeal revolved around the levy of Service Tax on royalty and technical services fee paid by Indian companies to foreign counterparts for the transfer of technical know-how. The Tribunal referred to various judgments where it was held that Service Tax is not leviable on such transactions. The Tribunal noted that the issue had been decided in favor of the assessee in multiple cases, including Aviat Chemicals, Yamaha Motors, Rathi Ispat, Navinon Ltd., Same Engines India, Amco Batteries, Rubco Sales International, Micro Finish Valves, Indian Pistons Ltd., and Bonfiglioli Transmissions.

2. The appellant, a PSU unit, had permission to contest the issue from the Committee of Secretaries. The Tribunal consolidated three appeals with a common issue for disposal. The learned Counsel argued that the issue was no longer res integra and relied on the Tribunal's decisions in favor of the assessee in similar cases. The JCDR conceded that the issue was covered by the judgments cited but reiterated the Department's stand.

3. After considering the judgments and submissions, the Tribunal found that the Service Tax was not leviable on the services rendered in the present case. Following the ratio of the cited judgments, the Tribunal set aside the impugned order and allowed the appeals. The Tribunal was satisfied with the submissions made by the learned Counsel and granted the stay application and appeal with consequential relief, if any.

In conclusion, the Appellate Tribunal CESTAT, Bangalore, ruled in favor of the appellant, holding that Service Tax cannot be levied on royalty and technical services fee paid by Indian companies to foreign counterparts for the transfer of technical know-how, citing various precedents where similar decisions were made in favor of the assessee.