Dispute on service tax for know-how transfer deemed asset transfer, not service. Waiver granted pending appeal.

The case involved a dispute over the imposition of service tax on an entrance fee collected for supplying technical know-how. The appellant successfully argued that the transaction was a transfer of an asset and not a provision of a consulting engineer's service. The Technical Member granted a complete waiver of pre-deposit and stayed the recovery of dues pending appeal, citing precedent that know-how transfer is not subject to service tax.

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Issues:
Interpretation of "consulting engineer's service" for service tax on technical know-how transfer.

Analysis:
The case involved M/s. Robert Bosch, S. A. Spain, collecting an entrance fee from M/s. Roots Industries Ltd. for supplying technical know-how for manufacturing signalling devices. The lower appellate authority imposed service tax on the entrance fee and penalties under sections 76 and 77. The appellant argued that they only transferred technical know-how for a price and did not provide any consulting engineer's service. They relied on the decision in Navinon Ltd. v. CCE to support their position that know-how transfer is not subject to service tax. The appellant claimed that the payment was for the transfer of an asset and not for any service rendered. The appellant's advocate reiterated these arguments in the appeal.

The appellant contended that they did not provide any advice or engineering consultancy to M/s. Roots Industries Ltd. and that the transaction was simply a transfer of technical know-how. On examining the facts, the Technical Member found that the exchange between the parties involved technical know-how for a price, with part of the compensation paid after service provided from outside India was brought under the service tax net. Citing the case law in Navinon Ltd. v. CCE, the Technical Member concluded that the demand for service tax did not seem sustainable. Consequently, the Technical Member granted a complete waiver of pre-deposit under the Finance Act, 1994, and stayed the recovery of dues until the appeal's disposal.

In summary, the judgment focused on the interpretation of "consulting engineer's service" in the context of service tax on the transfer of technical know-how. The appellant successfully argued that the transaction was a transfer of an asset and not a provision of service, leading to the waiver of pre-deposit and a stay on the recovery of dues pending appeal.

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