2018 (9) TMI 574 - AT - Service Tax

Consulting engineers Service - receipt of royalty against technical know-how - Held that - The fact is not under dispute that the appellant have transferred the technical know-how to M/s. A.T.E. Enterprises against which they have received the technical know-how fees. Therefore, the service does not fall under the category of consulting engineer - Mere providing the assistance to the service recipient will not take away the service of technical know-how. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the receipt of royalty against technical know-how constitutes a service under the category of consulting engineers.
2. Whether providing training assistance along with technical know-how changes the nature of the service to consulting engineer.

Analysis:
1. The appellant transferred technical know-how to M/s A.T.E. Enterprises Ltd. and received technical know-how fees for 2002-03 and 2003-04. The department claimed the receipt of royalty for technical know-how as a service under consulting engineers, leading to a confirmed demand upheld by the Ld. Commissioner (A). The appellant argued that such transfer does not fall under consulting engineers' service, citing various judgments in support.

2. The Ld. Counsel for the appellant highlighted judgments like Novinon Ltd., Kinetic Engineering Ltd., Colgate Palmolive Company, and others to support their claim. The Tribunal found that the transfer of technical know-how does not fit the consulting engineer category, even if training assistance is provided. The training is essential for transferring technical know-how, and mere assistance does not alter the nature of the service. The Tribunal ruled in favor of the appellant, setting aside the demand and allowing the appeal.

3. The Ld. Supdt. (AR) for the Revenue reiterated the impugned order's findings, arguing that providing training assistance along with technical know-how makes the service fall under consulting engineer. However, the Tribunal disagreed, emphasizing that the core service was technical know-how transfer, not consulting engineer services. The judgment of the Chennai Tribunal in Super Sales Agencies Ltd. vs. Commissioner of C.Ex., Coimbatore was cited by the Revenue but was not considered applicable in this case.

4. After considering both sides' submissions and examining the records, the Tribunal concluded that the appellant's transfer of technical know-how to M/s A.T.E. Enterprises did not constitute a service under the consulting engineer category. The training assistance provided did not change the fundamental nature of the service. Relying on the judgments presented by the Ld. Counsel, the Tribunal found the demand unsustainable and set aside the impugned order, ultimately allowing the appeal.