2018 (10) TMI 838 - AT - Service Tax

Management Consultant s Service - royalty payments made by the appellant to the foreign collaborators - demand of service tax - Held that - This issue is no more res integra and has been settled in the case of COMMISSIONER VERSUS MAJESTIC MOBIKES PVT. LTD. 2011 (9) TMI 956 - KARNATAKA HIGH COURT - the service tax liability on any taxable service provided by a non-resident or a person located outside India to a recipient in India would arise w.e.f. 18/04/2006 i.e. the date of enactment of the Section 66A of the Finance Act, 1994 - Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax on appellant under 'Consulting Engineer Service' and 'Intellectual Property Service'.

Issue 1: Service tax demand under 'Consulting Engineer Service' for the period up to 09/09/2004.

The appellant, engaged in manufacturing construction and earth moving equipment, faced a demand for service tax on royalty payments made to foreign collaborators. The Commissioner confirmed the demand under 'Consulting Engineer Service' for the period up to 09/09/2004. The appellant challenged this order, arguing that earlier rulings favored them and that the transfer of technology and royalty payments did not attract service tax. Citing a judgment by the Bombay High Court, the appellant contended that the service recipient in India is liable to service tax only from 18/04/2006. The appellant also highlighted a circular by the CBEC acknowledging this position. The Tribunal, following precedent and the Supreme Court's decision, set aside the impugned order, granting relief to the appellant.

Issue 2: Service tax demand under 'Intellectual Property Service' for the period from 10/09/2004 to 31/03/2006.

Another demand for service tax was made on royalty payments under 'Intellectual Property Service' for the period from 10/09/2004 to 31/03/2006. The appellant argued that the earlier order by the Commissioner(Appeals) favored them and that transfer of technology and royalty payments did not constitute services attracting service tax. The appellant relied on the judgment of the Bombay High Court and subsequent circular by the CBEC to support their case. The Tribunal, considering settled law and previous judgments, including one upheld by the Supreme Court, found in favor of the appellant. The impugned order was set aside, granting relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax under both 'Consulting Engineer Service' and 'Intellectual Property Service'. The decision was based on established legal principles, previous judgments, and the interpretation of relevant provisions, ultimately providing relief to the appellant in this case.