Consulting
engineer
CESTAT,
CHENNAI BENCH
EID
Parry (India) Ltd.
v.
Commissioner
of Service Tax*, Pondy
P.
G. Chacko, Judicial Member
and
P. Karthikeyan, Technical Member
Application
No. S/PD/155 of 2007
Appeal
No. S/210 OF 2007
Stay
Order No. 1091 of 2007
November
7, 2007
Section 65 read with section 86 of the Finance Act, 1994 - Consulting engineer - Assessee had paid royalty to its foreign collaborators as consideration for technical know-how, industrial property rights and technical assistance received by it - Service tax was demanded from assessee under category of ‘consulting engineer’s service’ - Whether since in impugned order, there was no whisper as to whether foreign company was acting in capacity of consulting engineers and, if so, in what discipline of engineering and amount of service tax demanded by revisional authority was a levy on entire amount of royalty paid by assessee to foreign company as consideration for numerous benefits received and technical assistance being only one of them, prima-facie case exist in favour of assessee for waiver of pre-deposit and stay of recovery in respect of amounts of service tax, interest and penalties - Held yes [Paras 2 and 3]
The revisional authority, in the impugned order, demanded service tax from the assessee, on a royalty paid by it to their foreign collaborators as consideration, for technical know-how, industrial property rights and technical assistance.
On appeal:
Prima facie case had been found against the demand inasmuch as the ingredients of consulting engineer’s service defined under the Act, had not been shown to have existed in the technical assistance aspect covered by the agreement. The definition required the departmental authority concerned to show that technical assistance was rendered by a consulting engineer to the assessee in any discipline of engineering, so as to enable the revenue to demand service tax on the gross amount paid as consideration for such service. In impugned order, there was no whisper as to whether foreign company was acting in the capacity of consulting engineers and, if so, in what discipline of engineering. Further, we have also noticed that the amount of service tax demanded by revisional authority was a levy on entire amount of royalty paid by them to foreign company as consideration for numerous benefits received from the German company. Technical assistance was only one of them. The impugned order was silent on the question as to what part of the royalty was paid for technical assistance. The order demands service tax on the entire amount. [Para 2]
In the result, there was prima facie case for the assessee and accordingly there will be waiver of pre-deposit and stay of recovery in respect of amounts of service tax, interest and penalties. [Para 3]