2014 (6) TMI 66 - AT - Service Tax

Classification of service - whether the services provided by the appellant can be considered to be one of the Consulting Engineer services or whether the same has to be considered as Intellectual Property Service - Held that - Even if it is presumed that the agreement for sale of knowhow also includes some element of consideration for imparting Consulting Engineer services then also the same is required to be quantified by the Revenue and brought out for making the demand which is not done by the Revenue. At the same time it is apparent from the relied upon judgments that an agreement for sale of technical knowhow has to be considered only as Intellectual Property Service under Section 65(55A) of the Finance Act, 1994 and cannot be considered as scientific or technical sale consultancy services as defined under Section 65(92) of the Finance Act, 1994 - service provided by the appellant belong to the category of Intellectual Property Service which was made effect from 10.09.2004. As the services by the appellant were provided during the period prior to 10.09.2004, therefore, no service tax is leviable upon the appellant in the present proceeding - Following decision of Kopran Ltd. Versus Commissioner of Central Excise, Raigad 2011 (3) TMI 224 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues involved:
1. Whether the services provided can be considered as Consulting Engineer services or Intellectual Property Service.

Analysis:
1. The appellant challenged the remand made by the first appellate authority, arguing that the services provided were only for the sale of technical knowhow, falling under Intellectual Property Service. The appellant contended that service tax on Consulting Engineer services was not applicable for the period in question (1999-2000). The appellant cited various case laws to support their argument.

2. The respondent argued that the agreement included provisions for technical services, justifying the taxation under Consulting Engineer services. The first appellate authority's findings supported this argument.

3. The Tribunal examined the facts and relevant legal provisions. It noted that no specific amount was charged for Consulting Engineer services in the agreement for sale of technical knowhow. Even if there was an element of Consulting Engineer services, the Revenue failed to quantify it for making a demand. The Tribunal referred to judgments emphasizing that agreements for sale of technical knowhow should be considered Intellectual Property Service, not Consulting Engineer services.

4. Citing the case of Korpan Ltd. Vs. Commissioner of C. Ex., Raigad, the Tribunal highlighted that the rights transferred under such agreements fell within the definition of 'intellectual property right' and not 'scientific or technical consultancy services.' The Tribunal rejected the demand for service tax under 'scientific or technical consultancy' based on the nature of the services provided and the legal interpretations.

5. Ultimately, the Tribunal concluded that the services provided by the appellant fell under Intellectual Property Service, effective from 10.09.2004. Since the services were rendered before this date, no service tax was leviable on the appellant. Consequently, the Tribunal allowed the appeal filed by the appellant, setting aside the order of the first appellate authority.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision based on the arguments presented by both parties and the relevant legal precedents.