CESTAT
Aksh Optifibers
Ltd.
v.
Commissioner of
Central Excise, Jaipur
R.K.
ABICHANDANI, PRESIDENT
AND , K.C.
MAMGAIN,TECHNICAL MEMBER
STAY ORDER NO.
5/108/06-ST
TAX STAP NO.
5/108/06-ST
SERVOCE TAX STAP
NO. 642 OF 2006
IN SERVICE TAX
APPEAL NO. 72 OF 2006
APRIL 17, 2006
Section
65, read with section 86 and 72 of Finance Act 1994 - Consulting engineer -
Period 2001-02 - Assessee, was engaged in research and development activities -
It had developed a project called ‘gramdoot’ - Under a technology transfer
agreement it transferred said project a
company - As per above agreement, assessee had received consideration both for
technology transfer and engineering services provided for setting up said project
- Lower authorities confirmed demand of service tax on entire amount so
received, along with penalties - Whether if break up of technology transfer
charges and consulting charges for engineering work were not separately
provided by assessee department could have done best judgement assessment for
service tax by breaking up that amount into technology know-how fee and
consulting engineer service - Held, yes - Whether therefore having regard to
facts and circumstances of case, assessee was be directed to pre-deposit part
of demand and such pre-deposit, recovery of balance amount of service tax and
penalty was to be waived - Held, yes (Para 4)
The
assessee, engaged in research and development activities, developed a new
project called ‘gramdoot’, which was transferred to a company under a technology
transfer agreement. Service tax was demanded by the revenue along with
penalties on the entire amount received by the assessee during the year 2001-02
on account of technical know-how fee from said company. The demand was
confirmed bythe lower authorities along with penalties. In the instant
application the assessee contended that had transferred technical know-how and
had not provided any service and therefore was not liable for any service tax.
However the revenue’s contention was that since the assessee had not given
separate break up for the technology transfer and the service provided as
consulting engineer, therefore, the lower authorities, had correctly demanded
service tax on the entire amount received.
On
appeal:
HELD
Under
article 3.1, of the agreement the amount of Rs. 1.50 crores was consideration
both for technology transfer and the engineering services provided for setting
up the project. That position was also clear of the agreement where that the
assessee primarily assisted the company setting up gramdoot project. The
service of consulting engineer were required for setting up the project. If
break up of technology transfer charges and consulting charges for engineering
work were not separately provided, the department could have done best judgment
assessment for the service tax by breaking up the amount of Rs. 1.50 crores
into technology know-how fee and consulting engineer services. Therefore,
having regard to the facts and circumstances of the case, the assessee was to
be directed to pre-deposit an amount of Rs. 2 lakhs. On such pre-deposit, the
recovery of balance amount of service tax and penalty was to be waived. (