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TMI Blog2015 (4) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... jit Banerjee, J. Shri Ravi Raghavan, Tanmoy Chakraverty and Arindam Chandra, Advocates, for the Petitioner. Shri R. Bharadwaj and Subir Kr. Saha, Advocates, for the Respondent. JUDGMENT In the present writ application the petitioner challenges the order dated 29th November, 2012 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Calcutta in Appeal No. ST/A/224/2010 [2013 (30) S.T.R. 630 (Tribunal)] which was filed by the petitioner against the order dated 26th March, 2010 passed by the Commissioner of Customs, Central Excise and Service Tax, Siliguri Commissionerate: Adjudication Cell. 2. By the order dated 26th March, 2010 the Commissioner had confirmed the department s demand of service tax amounting to ₹ 1,89,59,459.00, education cess amounting to ₹ 3,79,189/- and secondary and higher secondary cess amounting to ₹ 1,05,822/- collectively amounting to ₹ 1,94,44,470/-. The Commissioner also confirmed interest on the said amount and further imposed a penalty of ₹ 200/- per day for everyday during which failure to pay the tax continues or at the rate of 2 per cent of the tax per month, whichever is higher. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Licensee, with regard to materials used in the manufacture of the Products, Technical Information shall mean instructions on the required quantity, quality and characteristics and on their treatment in the manufacture of the Products. 1.5 The term The Licensor s Patent Rights means and includes all patents owned and/or acquired by the Licensor that are in force during the term of this Agreement and also covered by patent applications of the Licensor filed or having a priority date prior to the expiry of this Agreement to the extent they apply to the Products. 4.1 During the terms of this Agreement, the Licensor shall commence transmitting to the Licensee the Technical Information and Improvements except the Technical Information and Improvements that the Licensor is precluded from passing on to the Licensee in view of contractual obligations under other agreements of the Licensor. In spite of the above restrictions, the Licensor confirms that the Technical Information that will be transmitted by the Licensor under this Agreement will enable the Licensee to manufacture the Products. 5.1 The Licensor hereby grants to the Licensee, under its Technical Information and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be given the rights to avail these and for payment of royalty by the Licensee to the Licensor as herein shall constitute full compensation also for the use of the patent rights by the Licensee till the expiry of the life of the patent and the Licensee shall be free to manufacture and sell the Products under such patents even after the expiry of this Agreement. 6. According to the department this transfer of technical know-how attracted service tax, which is disputed by the writ petitioner. Whether or not the department is right in demanding service tax from the writ petitioner will be ultimately decided in the appeal pending before the CESTAT. In the present writ application this court is concerned only with the question as to whether the writ petitioner has been able to make out such a strong prima facie case that entitled it to a waiver of the entire pre-deposit in connection with the appeal before the CESTAT. 7. The petitioner has drawn this Court s attention to various provisions of Chapter V of the Finance Act, 1994 and Chapter VA of the Finance Act, 2003 which deal with service tax. The relevant clauses are set out hereinbelow :- S. 65 . In this Chapter, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties such as, know-how, trade secrets etc. are not recognized under any law for the time being in force in India and, hence, are not covered under Intellectual Property Service and, hence, not liable to service tax. The technical right that is transferred by the Swiss Company to the writ petitioner is not patented nor otherwise registered as an Intellectual Property Right in India. Hence, the same will not be covered under Section 65(105)(zzr) of the Finance Act and, therefore, service tax is not attracted. No patent exists in respect of the technical know-how granted to the writ petitioner under the collaboration agreement. Nature of the know-how involved is confidential information which is not in the public domain. Hence, there is no question of the same being patented. 10. Ld. Counsel relied on a decision of the CESTAT, Principal Bench New Delhi in a case reported in 2013 (30) S.T.R. 591 in support of his proposition that where a prima facie case has been made out that service tax is not attracted because the transfer of technical know-how from the foreign parent company to the Indian company is not covered by taxable service, the entire pre-deposit for preferring an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aspect of protection of the interest of the revenue and has accordingly, reduced the amount of pre-deposit substantially. The Tribunal has waived the entire pre-deposit on account of penalty and interest and has only directed the petitioner to make a pre-deposit of 25 per cent of the service tax demand. This is entirely fair and reasonable and does not warrant any interference. In this connection, Ld. Counsel relied on a decision of the Hon ble Supreme Court in the case of M/s. Benara Valves Ltd. v. Commissioner of Central Excise reported in 2008 (12) S.T.R. 104. The portion of the said judgment relied upon by the Ld. Counsel for the respondent is set out hereunder :- Two significant expressions used in the provisions are undue hardship to such person and safeguard the interests of revenue . Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. As noted above there are two important expressions in Section 35F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie will not be covered under Section 65(105)(zzr) of Chapter V of the Finance Act, 1994. As Such, prima facie, service tax liability will not be attracted to the transfer of the said technical know-how by the Swiss Company to the writ petitioner. 16. I am, therefore, of the view that the writ petitioner has made out a reasonably strong prima facie case in support of its contention that service tax is not attracted for transfer of technical know-how to the petitioner from its parent company in Switzerland. The Tribunal, in similar other cases, has granted unconditional stay of the Commissioner s order on the basis of strong prima facie case and, there is no reason why the petitioner should be treated differently. 17. I am conscious of the provision of Section 35F of the Central Excise Act, 1944. While ordering pre-deposit or waiving the same the appellate authority has to balance out the undue hardship that would be caused to the assessee if pre-deposit is ordered against the interest of the Revenue which may suffer if pre-deposit is waived. As has been held by this Court in Hooghly Mills Co. Ltd. v. Union of India (supra) and in Bongaigaon Refinery and Petrochem Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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