2009 (9) TMI 49 - AT - Service Tax

Transfer of technical know how - The contention of the assessees is that they only made a one time royalty payment to the German company and never received any technical assistance so as to be liable to pay service tax under the head consulting engineer s service held that matter remanded for consideration in view of levy of service tax on intellectual property rights with effect from 10.09.2004.

Summary

Issues:
Challenge to demand of service tax in the category of 'consulting engineers service' for the period prior to 10.9.2004 on consideration paid for transfer of technical know-how.

Analysis:
The appeal challenges the demand of service tax in the category of 'consulting engineers service' for a period before 10.9.2004, concerning the payment made by the assessees to a German company for technical know-how transfer for manufacturing 'onload tap changers' in India. The contention raised is that the assessees made a one-time royalty payment without receiving technical assistance, thus not liable for service tax under 'consulting engineer's service'. It is argued that liability for service tax on technical know-how transfer from abroad to India arose only post 10.9.2004. The Tribunal considers this argument in light of judgments from the Hon'ble Bombay High Court and Delhi High Court, namely Indian National Shipowners Association Vs. Union of India and Unitech Ltd. Vs. Commissioner of Service Tax, New Delhi, respectively. In light of these judgments, the impugned order is set aside, and the case is remitted for fresh decision to the adjudicating authority. The authority is directed to pass fresh orders after considering the mentioned judgments and providing a reasonable opportunity for the assessees to present their defense, leaving all issues open for fresh decision.

The Tribunal, in its decision, sets aside the impugned order and allows the appeal by way of remand. The operative portion of the order was pronounced in open court on 11.9.2009.