2006 (2) TMI 17 - AT - Service Tax

Service Tax Consulting Engineer The assessee has only authorized to other parties to use their trademark and as doing so they have provided technical know-how which cannot be equate to a service rendered by consulting engineer

Summary

Issues:
1. Whether services rendered by the assessee through trademark use agreement amount to services rendered by a Consulting Engineering Firm.

Analysis:
The judgment involves two appeals, one by the Revenue and the other by the assessee against the order of the Commissioner (Appeals). The Commissioner had directed the assessee to pay a confirmed demand while reducing the penalty. The main issue revolves around determining whether the services provided by the assessee under a trademark use agreement with other parties amount to services rendered by a Consulting Engineering Firm. The lower authority had held that the services provided fell under the taxable head of consulting engineers, leading to a demand for service tax.

The assessee's counsel argued that the trademark use agreement did not involve services rendered by a Consulting Engineering Firm. The agreement primarily focused on the use of the trademark and design, technical know-how, formulation of biscuits, supervision of production, and permission for marketing products. These activities, according to the counsel, did not align with the services of a Consulting Engineering Firm.

On the other hand, the Revenue contended that the technical assistance and know-how provided by the assessee constituted services falling under the category of Consulting Engineering. The Revenue was aggrieved by the Commissioner's decision to divide the demand amount into non-taxable and taxable components, reducing the penalty imposed on the party.

The Tribunal examined the case record and considered relevant citations provided by both sides. The Tribunal referred to previous judgments highlighting that royalty for the right to use a trademark or technical know-how does not necessarily constitute a service liable to service tax. The Tribunal also mentioned a case where knowledge in engineering was deemed to fall within the meaning of relevant legislation.

After thorough consideration, the Tribunal concluded that the services provided by the assessee, involving the use of their trademark and technical know-how, did not amount to services of a Consulting Engineering Firm. The Tribunal found no merit in the Revenue's arguments and set aside the impugned order, allowing the appeal filed by the assessee and dismissing the appeal by the Revenue.