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TMI Blog2008 (1) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into an agreement with JIPM for receiving "Total Productive Maintenance" (TPM) from JIPM during the period 28-2-99 to 16-8-2002. In terms of the agreement STL was liable to pay taxes due from JIPM in India. The original authority found that TPM came under the category of Management Consultancy service. After due process of law, the Assistant Commissioner demanded service tax from STL/JIPM and imposed penalties. 2. The ld. Counsel for the appellants reiterated the grounds taken in the appeal. It is submitted that the service provided by JIPM came under 'Intellectual Property' which was not liable to service tax at the material time. As 'Intellectual Property' was brought under the tax net subsequently the demand on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein received instruction from the Japanese Company in getting familiar with the technical information as per the agreement. The Tribunal decided in that case that the consideration paid to the Japanese Company was for transfer of Intellectual Property rights and not for any consultancy services. Another decision of the Tribunal relied on is the case of Aditya Cement v. CCE reported in 2007 (7) S.T.R. 153 (Tri.-Del.) = 2007 (218) E.L.T. 116 (T). In that case the Tribunal had decided that where the appellants received services from an Engineering Consultant who did not have an office in India and was based in a foreign country, the tax paid by the appellant was due to be refunded to it. As per Section 68 of the Finance Act, 1994, a service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It is a tool intended to enhance the productivity of an establishment on a continuing basis. The technology is transferred through audio and video devices as patented Intellectual Property. TPM is a patented technique and intellectual property transferred for consideration to STL for its use. Intellectual Property became a taxable service much after the material period. Therefore, the same activity engaged in by JIPM cannot be taxed as 'Management Consultancy' during the material period. The material period terminates prior to 16-8-2002. Services rendered by persons based abroad were subject to tax during the material period. From the records, it is seen that the tax for consideration for the services was paid by STL, as an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be considered as an agent of SNC Lavelin, Canada for the simple reason that the former is a service receiver not an agent of the foreign company. K.S.E.B. also cannot be considered as an authorised person on behalf of the foreign company for the reason that K.S.E.B. does not represent the foreign company in India. K.S.E.B merely discharges tax liabilities accruing out of the payments made to the foreign company in terms of the payment terms enumerated in the contract. Tax deductions at source is prescribed under Income-tax Act whereas no such condition to deduct tax at source exists into Service Tax Rules. The basis for determining the tax liability on the service receiver, i.e. K.S.E.B. itself is wrong as he is neither an agent nor an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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