2017 (3) TMI 787 - AT - Service Tax

Business Auxiliary Service - whether the activity of cutting and packing of lettuce, onion and salad mix would fall under the category of business auxiliary service under the Head of production or processing of goods for, or on behalf of client or not? - Held that - an identical issue came up before the very same Bench in the case of Tasty Bite Eatables Ltd. 2015 (11) TMI 231 - CESTAT MUMBAI wherein the Bench held for similar activity that the activity of processing the vegetables by the appellant will be in relation to agriculture hence not liable to service tax under business auxiliary services - demand set aside. Whether the appellant is required to discharge the service tax under Consulting Engineer service by way of reverse charge mechanism for transfer of technical know-how or otherwise? - Held that - the said agreement entered by appellants with the foreign entity is in respect of transfer of technical know-how and design and drawing in order to establish the facility in India. We find that there is no consultancy or technical assistance extended given by the Engineering firm - similar issue decided in the case of CST vs. Leibert Corporation 2014 (3) TMI 265 - CESTAT MUMBAI , where it was held that The said service does not, in any way, relate to supply of technical know-how which the respondent has undertaken. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant rendered 'Business Auxiliary service' and is liable for service tax.
2. Whether the appellant is required to pay service tax under Consulting Engineer service for the transfer of technical know-how.

Analysis:

Issue 1: Business Auxiliary Service Liability
The appellant carried out cutting and packing activities for a client, which the Revenue argued fell under business auxiliary service. The demand for service tax was contested by the appellant, citing exemption notifications and circulars. The Counsel argued that the activities were exempt under circulars and previous tribunal decisions. The Revenue contended that the activities did not qualify for exemption as they were not related to agricultural produce. The Tribunal referred to a previous case involving similar activities and held that the processing of vegetables for a client in relation to agriculture is not liable for service tax under business auxiliary services. The demand under 'Business Auxiliary Service' was set aside.

Issue 2: Consulting Engineer Service Liability
Regarding the demand for service tax under Consulting Engineer Service for transfer of technical know-how, the appellant argued that the technical know-how did not fall under this category based on various tribunal decisions. The Tribunal agreed with the appellant, citing precedents that transfer of technical know-how does not constitute Consulting Engineer Service. The demands confirmed under this category were also set aside based on previous tribunal decisions.

The Tribunal allowed the appeals, setting aside the impugned orders and confirming the decisions on both issues. The judgments were pronounced in court on 08.03.2017.