2009 (10) TMI 5 - AT - Service Tax

Consulting Service versus Intellectual Property Service an agreement to provide technical know-how, complete product design and engineering specifications of various types, other relevant advices including designs and details for manufacturing tools, machines, quality control machines for manufacture of automotive silent chain held that - transfer of technical know-how did not amount to consulting engineer service but was intellectual property service which was leviable to service tax only from 10.9.2004 demand and penalty set aside.

Summary

Issues:
Interpretation of "consulting engineer service" for service tax liability.

Analysis:
The case involved a dispute regarding the classification of services provided by the appellants as "consulting engineer service" for the purpose of service tax liability. The appellants had entered into an agreement with a foreign entity to provide technical know-how, product design, engineering specifications, and other related advice for manufacturing automotive silent chains. The adjudicating authority had confirmed the demand of service tax against the appellants, which was upheld by the Commissioner (Appeals).

Upon hearing both sides, the Tribunal referred to a previous order where it was established that the transfer of technical know-how did not constitute "consulting engineer service" but rather fell under intellectual property service, which became taxable only from a specific date. Since the period in question in the present appeal was before the taxable date, the demand against the appellants could not be sustained. Therefore, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants.

In conclusion, the Tribunal ruled that the services provided by the appellants did not qualify as "consulting engineer service" for service tax liability during the relevant period. The decision was based on the distinction between technical know-how transfer and consulting engineer services, as established in a previous order. The appeal was allowed, and the demand for service tax against the appellants was set aside.