2007 (4) TMI 328 - AT - Service Tax

Consulting Engineer- Notification No. 36/2004-ST dated 31.12.2004- The appellants had entered into a technical agreement with M/s. Demag Devalal Industrial Turbo Machinery Ltd., U.K. under which the foreign company had provided technical information/technical assistance/transfer of technical know-how for setting up/operationalisation of service centre for repair and maintenance of industrial gas turbines. The revenue has proceeded to consider this transfer of technology as coming within the ambit of consulting engineer services for levy of service tax. The period involved in the present case is from 28-8-2002 to 1-1-2004. Held that- transfer of technology does not come within the ambit of consulting engineer service . Furthermore, the Notification cited by the revenue has come into effective only from 1-1-2005 but the period in question is prior to 1-1-2005. Hence, the demand of service tax is not justifiable.

Summary

Issues:
Challenge to confirmation of service tax on grounds of time bar and merits.

Analysis:
The appellant challenged the confirmation of service tax in relation to a technical agreement with a foreign company providing technical information and know-how for setting up a service center. The revenue considered this transfer of technology as "consulting engineer services" for levying service tax for the period from 28-8-2002 to 1-1-2004. However, various judgments, including Navinon Ltd. and Pfizer Ltd., have held that such transfer of technology does not fall under "consulting engineer services."

The revenue contended that the appellant is liable to pay service tax based on Notification No. 36/2004-ST. The appellant challenged the service tax confirmation on both time bar and merits grounds. After hearing both parties, it was concluded that previous judgments favored the assessee, stating that the transfer of technology does not constitute "consulting engineer service." Additionally, the Notification referred to by the revenue came into effect only from 1-1-2005, whereas the period in question predates this date. Therefore, the demand for service tax was deemed unjustifiable. Consequently, the stay application and the appeal were allowed with any necessary consequential relief.