i Supreme
Court
26. 2018 (10) GSTL 118 (SC)
Commissioner of
Service Tax vs. Bhayana Builders Pvt. Ltd.
Date of Order: 19th February, 2018
Value of materials
supplied free of cost by service recipient would not be includible in the value
of taxable services.
Facts
Respondent assessee was
engaged in the business of construction and was providing “Commercial or
Industrial Construction Service”. Revenue demanded to include value of goods
supplied by service recipient free while calculating “gross amount charged” and
33% thereof be treated as value for levying service tax vide Notification No.
15/2004-ST dated September 10, 2004. Later, Notification was amended vide
another Notification No. 4/2005-ST dated March 01, 2005 adding an explanation
stating that the “gross amount charged” shall include the value of goods and
material supplied and provided or used by the provider of construction services
for providing such service. The Larger Bench decided that value of free
goods/materials supplied by service recipient cannot be added for valuation of
service provided by service provider. Correctness of the said Larger Bench
decision was challenged in present appeals. Revenue argued that Explanation (c)
to section 67 (4) of Finance Act, 1994 provided that payment received in “any
form” and “any amount credited or debited’ was to be included in gross amount
charged. Department also argued that 33% rate was prescribed by Government
keeping in view the entire construction project which roughly comprises of 67%
of cost of material and 33% is value of services.
Held
Hon’ble Supreme Court noted
that the Phrase “gross amount” in section 67 only referred to the entire
contract value without deduction of any expenses. Further, the word ‘charged’
used in section 67 referred to the amount billed by service provider to service
receiver. By using further words “for such service provided”, the Act required
a nexus between the amount charged and services provided. Therefore, amount
having no nexus with taxable service cannot be part of taxable value u/s. 67.
Though section 67 (4) states that the value shall be determined in such manner
as may be prescribed, however, it is subject to the provisions of sub-sections
(1), (2) and (3). Moreover, no such
manner was prescribed which included the value of free goods/ material supplied
by the service recipient for determination of the gross value. Explanation (c)
to section 67 only provided for mode of payment or book adjustment and did not
expand the meaning of the term “gross amount charged”. Further it was held that
value of taxable services cannot be dependent on value of goods supplied free
of cost by service recipient since service recipient can use any quality of
material and value of such goods can vary significantly. Firstly, no material
was produced before Hon’ble Supreme Court to justify the basis of formula
adopted while issuing notification. Secondly, the language of notification also
provided for “33% of gross amount charged for providing taxable services”.
Further, even vide section 93 of the Finance Act, 1994, exemption from levy of
service tax leviable on “taxable service” only can be provided by Government.
Therefore, since value of goods provided by service provider free of cost was
not specifically included by legislature, the same cannot form part of taxable
value of services.
27. 2018 (10) GSTL 401 (SC)
Union of India vs. Intercontinental Consultants and Technocrats Pvt. Ltd. Date of Order: 07th March, 2018
No Service Tax is leviable
on reimbursement of expenses prior to May 14, 2015.
Facts
Respondents were receiving
reimbursement of expenses incurred such as air travel, hotel stay, etc.
Writ petition was filed by assessees challenging the vires of Rule 5 of
Service Tax (Determination of Value) Rules, 2005 as unconstitutional and ultra
vires section 66 and 67 of the Finance Act, 1994. Contention of the
assessee was that section 67 was amended from May 14, 2015 to include
reimbursement of expenses through insertion of an explanation. Prior to such
amendment, ‘consideration’ in respect of taxable services provided or to be
provided was only leviable to service tax. Assessee relied on
Circular/Instruction F. No. B-43/5/97-TRU dated June 06, 1997. Section 67
provided for gross amount charged for providing ‘such’ taxable service and
therefore, any amount collected which was not for providing such taxable
service cannot be covered within tax net.
Held
Hon’ble
Supreme Court observed that the expression ‘such’ used in section 67 provided
for charging service tax only on gross amount charged for providing ‘such’
taxable services and value cannot be more or less than consideration paid as quid
pro quo for rendering such service. Therefore, any other amount cannot form
part of value of services. Though section 67 (4) was provided for making rules
to lay down manner of valuation, the same was subject to section 67 (1) and
therefore, cannot travel beyond section 67 (1). Consequently, noting the
amendment to section 67 vide the Finance Act, 2015, it was held that reimbursable expenditure or
cost will not form part of value of taxable services prior to May 14, 2015.
28. 2018 (9) GSTL 337
(SC) Commissioner of
Central Excise and S.T. vs. Ultra Tech Cement Ltd. Date of Order :
01st February, 2018
No Cenvat Credit
admissible on outward transportation services from factory to buyer’s premises.
Facts
Assessee availed Cenvat
credit of service tax paid on outward transportation of goods through a
transport agency from their premises to the customer’s premises from January,
2010 to June, 2010. Revenue alleged that such transfer cannot be considered to
be used directly or indirectly in relation to clearance of goods from the
factory viz. place of removal and therefore, disallowed Cenvat credit
considering it not to be an input service within the ambit of Rule 2(l)(ii) of
the CENVAT Credit Rules, 2004. Considering the provisions of the Rules,
adjudicating authority held that post clearance transportation services cannot
be considered to be “input services”. Further, in absence of any documentary
evidence relating to prove conditions provided in Circular 97/8/2007-Service
Tax dated August 23, 2007 clarifying the definition of “place of removal”, OIO
was passed confirming demand. After rounds of litigation, Revenue filed an
appeal to Hon’ble Supreme Court.
Held
As per the definition of
“input service” contained in Rule 2(l) of Cenvat Credit Rules, 2004, Hon’ble
Supreme Court observed that such outward transportation is not covered under
Rule 2 (l)(i). Further, Rule 2 (l) (ii) covers only those services, which are
used by the manufacturer, whether directly or indirectly, in or in relation to
the manufacture of final products and clearance of final products upto the place of removal. The two clauses in
the definition should be read harmoniously and there should not be any
conflict, which defeats the scheme of the Law. Therefore, after the amendment
made from 01 March, 2008, wherein the word ‘from’ was replaced by the word
‘upto’, goods transport agency service used for the purpose of outward
transportation from place of removal i.e. factory to customer’s premises,
cannot be considered as “input service” for availment of Cenvat credit.
Circular was held to be inapplicable in the present case since it was issued
prior to the amendment in the definition of “input service”. If said circular
is made applicable even in respect of post amendment cases, it would be
violative of Rule 2(l) of the CENVAT Credit Rules.
II
High Court
29. 2018 (11) GSTL 341
(All.) Astt.. Commr. of
Central Excise vs. Advance Steel Tubes Ltd. Date of Order: 06th
March, 2018
Doctrine of unjust
enrichment not applicable in case of pre-deposit of duty by the assessee at the
time of filing of appeal.
Facts
The officers of Central
Excise visited the factory premises of the assessee and found variation in the
finished good as compared to the balance shown in RG-1. The stock of finished
products was also found short. The stock of inputs was found excess as compared
to the stock register. An investigation was made and the party debited an
amount of 18.75 lakh under protest on account of the said discrepancies. The
assessee made pre-deposit of INR 18.75 lakh before filing of appeal. On account
of conclusion of proceedings before Tribunal and the Settlement Commission,
amount of INR 10,34,000 was claimed as refund out of
the pre-deposit made.
The refund claim was
rejected by the Adjudicating Officer by holding that the party had accounted
for the duty paid under protest as expenditure in the balance sheet and costing
of the products were finalised by taking into account the cost of raw materials
along with manufacturing and other expenses and hence, the presumption was that
the same has been passed on to the buyer in the form of incurred/enhanced
costing for current and further supplies of the party’s products. The assessee
filed an appeal with the Commissioner (Appeals) which was rejected. Appeal was
filed before the Tribunal.
Tribunal was of the view
that this was not the case of the unjust enrichment because the duty involved
in refund was not paid at the time of clearance of goods but subsequently
during the course of investigation for the past period. The goods had already
been cleared earlier. It was emphasised that the confirmed duty was adjusted
from the pre-deposit by treating it as a sanctioned refund. In so far as the
amount which had been taken by the department during investigation that is a
sum of Rs.8,40,120/-, the same had also been taken without considering the cost
structure of the goods and despite that the department was invoking the bar of
unjust enrichment to the balance amount for which the refund has been claimed
and this would not be tenable. Accordingly, order passed by the Hon’ble Tribunal
was in favour of assessee. The Revenue went on to file an appeal with the High
Court.
Held
The Hon’ble High Court has
accepted the final decision taken by Tribunal and held that that the bar of
section 11B of the Act did not apply in the present case, is correct and
justified.
30. [2018-TIOL-1058-HC-DEL-ST] Santani Sales Organization vs.
CESTAT, Delhi and Others Date of Order: 31st May, 2018
Pre-deposit of 10% while
filing second Appeal u/s. 35F of the Central Excise Act, 1944 is inclusive of 7.5% deposit made
for the first appeal.
Facts
The question before the
Court is whether as per section 35F of the Central Excise Act, 1944, the
petitioner is required to make an additional pre-deposit of 10% of the
duty and penalty in dispute over and
above 7.5% deposit made for filing of first appeal before the Commissioner
(Appeals) while filing second appeal before the Tribunal. Circular No.
984/08/2014-CX dated 16th September, 2014 clarifies that “in the
event of appeal against the order of Commissioner (Appeal) before the Tribunal,
10% is to be paid on the amount of duty demanded or penalty imposed by the
Commissioner (Appeal).
Held
The Court noted that the
section should not be construed by adding or substituting words. The intent is
that the assessee should pre-deposit 10% of the total tax or penalty, which is
the subject matter of the Appeal. It is not to ignore the pre-deposit of 7.5%
already made to file first appeal. There is logic in increasing pre-deposit by
2.5% when second appeal is filed, but adding words to the plain and unambiguous
provision that 10% pre-deposit will be
over and above 7.5% pre-deposit made at the time of the first appeal is
uncalled for. Therefore the writ petition is allowed and it is directed that
the petitioners and others on filing second appeal is required to deposit 10%
of the amount of duty/penalty as
confirmed by the first appellate authority inclusive of 7.5% pre-deposit
made for the first appeal.
III
Tribunal
31. [2018] 93 taxmann.com 338 (Mumbai-CESTAT) Ipca Laboratories
Ltd. vs. CCE & ST
Date of Order: 26th April, 2018
Tribunal held that
reimbursements of salaries paid by distributors to sales representatives
appointed by them in foreign countries would not be taxed under “business auxiliary
services”. Service tax demand under
“scientific and technical consultancy services” was held to be unsustainable in
respect of payments made to foreign regulatory authorities for
registration/approval of products. Tribunal held that in absence of online
access, data storage services provided by foreign service provider would not be
liable to service tax under “online database access and retrieval services”
Facts
Appellant manufacturer of
medicaments engaged various distributors for distribution of medicaments in
various countries. These distributors appointed sale representatives for
promotion of products supplied by appellant and salaries of such sales
representatives are reimbursed by appellant to the distributors under a cover
of debit note. Revenue demanded service tax on such reimbursements under
category of “business auxiliary services.” As regards appellant receiving
services of registration of its therapeutic products in foreign company,
revenue alleged that such services are liable to service tax as “scientific and
technical consultancy services”. Further, service tax was demanded under
category of “online access and database retrieval services” in respect of
invoices raised by foreign company for alert storage charges, internet charges
etc.
Held
As regards demand under
category of “business auxiliary services”, Hon’ble Tribunal noted that the
agreement between appellant and distributors provides that promotional
activities will be directly under supervision of the appellant. The invoices
raised by distributors for such expenses describe the same as ‘”amounts towards
marketing survey and promotional expenses”/ “marketing expenses” etc. and
neither the invoices nor the debit notes contain any breakup of expenses.
Tribunal held that demand under “business auxiliary services” would not sustain
on reimbursements made by appellant. For this purpose, it relied on the
decision in case of Genom Biotech (P) Ltd. vs. CCE&C [2016] 71
taxmann.com 123 (Mum.-CESTAT), wherein Tribunal categorically held that
services rendered in connection with business and commerce outside India were
not intended to be taxed in India in terms of erstwhile service tax rules. As
regards next issue of demand under “scientific and technical consultancy
services”, Tribunal noted that such services are in the nature of regulatory
services obtained for registration/approval of appellant’s products in other
countries. Reference was made to the decision in Administrative Staff
College of India vs. CC & CE [2009] 18 STT 78 (Bang. – CESTAT), also
affirmed by Hon’ble Supreme Court in 2010 (20) STR J117, wherein it was
held that in order to assert that an organisation is providing scientific or
technical consultancy, two basic ingredients have to be established. The
organisation must be a science or technology institution and the consultancy
must relate to one or more disciplines of science or technology. In present
case Tribunal noted that the service provider merely executes registration
process without rendering any advise, consultancy or technical assistance in
the science. Also, the said service provider is not a scientist or a technocrat
or any science or technology institutions or organisations. Thus, Tribunal held
that as these regulatory services are not in the nature of “Scientific and
Technical Consultancy Services”, impugned demand is liable to be set
aside. Further, as regards demand under “online database and access retrieval
services”, it was observed that the services were used by appellant for data
storage. The foreign service provider neither has website where data can be
accessed nor any information is accessed by appellant from any database of said foreign company. Since no
online service is provided and also, there is no online service provider,
Tribunal set aside impugned demand.
32. [2018] 93 taxmann.com 482 (New Delhi-CESTAT) Deputy
Conservator of Forest and Deputy Field Director vs. CCE.
Date of Order: 11th April, 2018
Tribunal held that fees
collected by state forest department for making available vehicles on rent for
safari tour into forests, are fees for discharge of statutory functions and
hence cannot be said to be taxable as consideration for supplying “tour operator
services”.
Facts
Appellant comes under
Department of Forests, Govt. of Rajasthan and exercised the jurisdiction and
control over the Tiger Projects in Rajasthan. The Revenue noticed that the
appellant was collecting certain amounts from the tourists and making available
vehicles on rent for safari tour into the Ranthambore Park. Out of the amounts
so collected, a certain portion was paid to the vehicle owners towards rent of
the vehicle and the balance was retained and deposited with the State Government
in appropriate head of account. Revenue alleged that State Forest Department
had made arrangements for supply of vehicles to tourists for going around the
National Park and has recovered amounts towards the same, thereby liable to pay
service tax under “tour operator services”.
Held
Hon’ble Tribunal noted that
the Forest Department performs the sovereign function of protecting and
improving the environment and to safeguard the forests and wild life of the
country as mandated under Article 48A of the Constitution of India. The Wild
Life (Protection) Act, 1972, which provides for Notification and Management of
National Parks for conservation of wild life, empowers the State Government, to
notify the forests as National Park as well as to restrict the entry of
visitors as well as vehicles into the National Park. Tribunal noted that the
primary objective of such restriction is to protect wild life and tourism is
permitted only to the extent circumscribed by the above objectives. It was also
observed that the amount recovered from the tourists are credited to the
account of the State Government after reimbursing the vehicle owners towards
the rent payable for such vehicles. Tribunal noted that the Forest Department
has the mandatory duty to protect the environment and to safeguard forests and
wild life. Therefore, it was held that amounts recovered by appellant towards
issue of entry permits as well as vehicles which have also been credited to the
State Treasury are to be considered in the nature of fee or amount collected as
per the provisions of relevant statute for performance of statutory functions
and cannot be considered as consideration for purposes of organizing tour.
Accordingly, present appeal was allowed by setting aside impugned demand.
33. [2018] 93 taxmann.com 162 (New Delhi-CESTAT) Vijay Kumar
Kataria vs. CCE.
Date of Order: 30th January, 2018
Activities of replacing
old damaged water line, improvement of water supply in various villages etc.
falls under category of “commercial and industrial construction service” and as
the said services were provided to Government organisation, which is
non-commercial, no service tax liability would arise.
Facts
Appellant executed
contracts with Delhi Jal Board, in which nature of work involved replacing of
old damaged water line, for improvement of water supply in various villages as
well as replacement of badly silted and damaged sewer lines. Revenue alleged
that services provided by appellant are classifiable under Management,
Maintenance or Repair Service as such services are provided under maintenance
contract. On the other hand, appellant contends that services in question are
more appropriately classifiable under “commercial and industrial construction
services”. Appellant further submitted that since the services have been
rendered to Delhi Jal Board, such services are not indented for Commerce or
Industry and accordingly, no service tax would be liable to be paid.
Held
Hon’ble Tribunal noted that
contracts between appellant and Delhi Jal Board are for replacement of
pipelines in specified segments. It is neither in the nature of an ongoing
maintenance contract nor in the nature of construction or laying of
pipelines/conduit. Accordingly, Tribunal concurred with appellant’s submission
that the service in question is more specifically covered under the category of
Commercial and Industrial Construction. It was held that classification under
Management, Maintenance or Repair would not cover the activities of the
appellant since these are not in the nature of Maintenance Contract. Further, recording a finding that Delhi Jal
Board is not a commercial organisation, Tribunal held that appellant would not
be liable to pay any service tax demand and thereby, set aside impugned order.
34. 2018 (11) GSTL 104 (Tri. – Chennai) Prasad Corporation Ltd.
vs. Commissioner of Service Tax, Chennai.
Date of Order: 30th Oct., 2017
Statutory provisions
relating to taxation to be construed literally without engraving any additional
meaning thereto.
Facts
Appellant assessee offered
services like Computer graphics, digital restoration and reverse telecine to
customers abroad, seeking to cover the services under Business Auxiliary
Services. Department initiated proceedings alleging that the services provided
are in the nature of “Video Tape Production Services” defined u/s. 65 (105)
(zi), hence falling within the ambit of Rule 3 (1) (ii) of Export of services
Rules, 2005, therefore will not be treated as export of service. Later,
confirmed the allegation and service tax liability along with interest and
penalty. Appellant appealed to Tribunal against the impugned order stating that
services provided by Appellant are post-production film activities rendered for
services to recipients outside India as per their requirements and for which it
received payment in free convertible foreign exchange. Whereas Respondent
department contested that Video Tape Production services include the services
relating to editing, cutting, colouring, imparting special effects, processing,
adding etc. Appellant thus performs such services of addition, modifying etc.
in respect of the work undertaken by them; hence their services should
justifiably fall within “Video Tape Production Services”.
Held
Hon’ble CESTAT held that
services performed by Appellant definitely do not involve recording of any
programme, event or function. In fact services of Computer Graphics, Digital
Restoration, and Reverse Telecine, all involving activities on old feature
films are post-production film activities rendered for service recipients’ as
per their requirements. The definitions have to be read in totality and part
thereof cannot be picked up to justify that the activities performed in the
instant case will come under “Video Tape Production Services”. The
statutory provisions relating to taxation have to be construed literally
without engraving any additional meaning thereto except in very rare cases
where, the maxim of casus omissus would apply. Thus, services of restoration,
giving special effects etc. in respect of old films would not be covered under
Video Tape Production service. Appeal allowed setting aside the Impugned Order.
35. 2018 (11) GSTL 427 (Tri. – Del.) Sir Ganga Ram Hospital,
Versus Commissioner of Central Excise Delhi-I. Date of Order:06th December,
2017
Collection
charges/facilitation fees paid to doctors is not consideration for business
support services. It is exempt by virtue of Notification No. 25/ 2012 – ST
dated 20th June 2012.
Facts
The appellants are engaged
in providing health care services to the patients. The appellants have engaged
professionals and doctors on contractual basis. The doctors are provided space
in the hospitals with required facilities to attend to the patients coming to
the hospitals, run by the appellants. These doctors engaged on contract basis
are paid professional fee on a predetermined ratio on the amount received by
the appellants from the patients. The Revenue contended that doctors are in
business and the “collection charges/facilitation fee” retained by the
appellants are liable to service tax under the category of Business Support
Service for the period prior to 01.07.2012 and are a taxable service post
negative list also. The Revenue held a view that such charges/fee retained by
the appellants formed a taxable consideration for the service of
infrastructural support provided by the appellants to the doctors to enable the
doctors to carry out their work in the hospital.
Held
Hon’ble Tribunal held that
for providing healthcare services, the appellants entered into agreements with
various consulting doctors and that it does not find any business support
services in such arrangement. Further, reliance is placed on Dr. Devender
Surtis AIR 1962 SC 63 and it has been held that the doctors are not in
business or commerce but are engaged in medical profession. Further,
Notification No. 25/2011-ST exempted levy of service tax on health care
services rendered by clinical establishments. Hon’ble Tribunal held that the
view of the Revenue that in spite of such exemption available to health care
services, a part of the consideration received for such health care services
from the patients shall be taxed as business support service/taxable service is
not tenable. Accordingly, it was held that the impugned orders against which
appellants’ hospital filed appeal are devoid of merit, the same were set–aside.
36. 2018 (11) GSTL 309 (Tri. – Bang) Sundaram Finance Limited vs.
Commissioner of C. EX. & S.T., LTU Chennai.
Date of Order: 14th September, 2017
Charges levied by on
account of Fleet Card issued by the assessee to the customers who availed
vehicle loan facilities from them is for facilitating the customers to procure
is not in the nature of interest on loans – Chargeable to service tax.
Facts
The assessee is engaged in
finance operations as a Non-Banking Financial Company. During the verification
of accounts maintained by appellant-assessee, the officers noted that service
tax has not been paid on income shown under the heading “Fleet Card Income”
from their customers. The Fleet Card issued by the assessee to the customer,
who availed vehicle loan facilities from them is for facilitating the customers
to procure fuel from the outlets of petroleum companies, with whom the assessee
had prior arrangement. These cards carry pre-paid facility as well as credit
facility. The creditworthiness of the customers was verified and cards were
issued by the appellant in their trademark as well as that of oil companies.
The cards provide credit facilities for purchasing fuel for the vehicle of the
customer.
The Revenue entertained a
view that the assessee is liable to tax under the head “Banking and Other
Financial Services”, Credit Card Services” in respect of fleet card
income. The assessee contended that the “additional finance charge”
is nothing but interest. Circular issued by CBEC dated 17th
September 2004 clearly specifies that interest on loans is excluded for payment
of service tax. Notification No. 12/2006-ST, dated 19th April 2006
stipulates that Interest on Loans is not to be included in the assessable
value. Further, as per Black’s Dictionary, “finance charge” is
nothing but an additional payment in the form of interest paid by a retail
buyer with the privilege of purchasing goods or services in instalments.
Held
Hon’ble CESTAT relying on
the findings of original authority held that the arrangement of fleet card
cannot be treated as repayment of loan but only a payment against credit card
utilisation. A loan is a prearranged specific amount given at one-time or in
instalments. However, in “Fleet Card System”, the same credit limit
is extended every fortnight and sometimes even remains unutilised. Fleet Card
function cannot therefore, be treated at par with a loan transaction. Further,
the amount charged by the assessee is exclusive of interest and other charges.
Interest for the month is also shown separately. Hence, the claim that
“finance charge” and “additional finance charge” are
interest is not correct.
37. [2018-TIOL-1888-CESTAT-MUM] Holtech Asia P. Ltd vs. Commissioner of Central Excise,
GST-Pune-I. Date of Order: 20th April, 2018
Registration
of Project office of a foreign company in India is not sufficient to conclude
that the services provided to the foreign company are
received in India, unless the project office is concerned with the
services provided
Facts
The Appellant rendered
services to its parent company in USA. A refund claim was filed under Rule 5 of
the CENVAT Credit Rules, 2004 read with Rule 6A of the Service Tax Rules, 1994
towards CENVAT credit paid on input services used in providing output services.
The refund was rejected on the ground that the parent company has a project
office which is registered in India. Therefore as the service provider and
service receiver are in India, Rule 8 of the Place of Provision of Service
Rules, 2012 is applicable and accordingly condition (b) i.e. recipient located
outside India and (d) i.e. place of provision outside India of Rule 6A is not
satisfied and therefore there is no export. It was argued that the person who
has contracted is the company in USA and payment is also received in foreign exchange.
Held
The Tribunal noted that it
is undisputed that the services are received by the parent company in USA and
the amount is received in foreign exchange. Further, the project office in
India was set up with an intention to provide services to the customer in
India. Accordingly, such office in India had no connection with the services
rendered by the Appellants. Accordingly, it was held that the project office
registered in India, having no connection with the services rendered cannot be
considered as a recipient. Further in terms of Explanation 3 to section 65B
(44) different establishment located
in non-taxable territory and
taxable territory are to be treated as establishment of different persons thus
clear that the office outside India is different establishment from its project
office in India. Thus, the recipient being outside India, place of supply being
outside India, refund is admissible.
38. [2018-TIOL-1700-CESTAT-MUM] Suzlon Energy Limited vs.
Commissioner of Central Excise & Service Tax, Pune-III. Date of Order: 02nd
May, 2018. Period: June 2007 to September 2010
Taxation of Goods and that
of services are mutually and explicitly conceived levies
Facts
The Appellant entered into
an agreement with three subsidiary companies situated in Germany and Netherland
with whom product development and purchase agreement had been entered into. In
terms thereof, subsidiaries provided technical know-how used by the appellant
for manufacture of wind turbine generators. The technical know-how/engineering
designs and drawings were imported against the bill of entry. The supply was an
outright sale with full ownership vested with the appellant. The Revenue raised
a demand to bring such imports within the framework of design service and
confirmed the service tax demand. It was argued that outright transfer or
purchase of technical know-how being excluded from the definition of intellectual
property in service, it is not legal to bring in the coverage of design
service.
Held
The Tribunal relying on
several judgments noted that taxation of goods and that of services are mutually and explicitly
conceived levies, it is clear that the same activity cannot be taxed as goods and as services.
