2011 (4) TMI 1187 - AT - Service Tax

Tribunal Waives Pre-Deposit for Lokksmiths Industries in Service Tax Dispute

The Tribunal allowed the stay petition, waiving the pre-deposit of service tax, interest, and penalty for M/s. Lokksmiths Industries Pvt. Ltd. The ... Waiver of pre-deposit of service tax, interest and penalty - Intellectual property services - Manufacturing combination flocks falling under Chapter Sub Heading 83014010 - Appellant contended that they were only receiver of services from abroad and were not liable to pay tax prior to 18.04.06 - Another submission of the appellant was that what is being transferred was the goods and IPR and the IPR to be taxable are those which are prescribed by law and their case does not fall under this - Held that:- Considering the nature of services transacted, held that there is considerable force in the argument of the appellant - Decided in favour of assessee. Issues involved:1. Liability to pay service tax on technical designs and drawings under 'intellectual property services'.2. Applicability of Rule 2(d)(iv) of the Service Tax Rules, 1994.3. Eligibility for credit of service tax.4. Issue of limitation regarding the show cause notice.Analysis:1. Liability to pay service tax on technical designs and drawings under 'intellectual property services':The case involved M/s. Lokksmiths Industries Pvt. Ltd., Daman, manufacturing combination flocks falling under Chapter Sub Heading 83014010. They were served with a notice demanding service tax on the services of technical designs and drawings categorized as 'intellectual property services'. The Assistant Commissioner confirmed the demand for service tax and imposed a penalty. The appellant contended that they were only receivers of services from abroad and were not liable to pay tax before a certain date. They argued that what was being transferred were goods and intellectual property rights (IPR), which should only be taxable if prescribed by law. They also raised the issue of limitation as the show cause notice was issued beyond the time limits.2. Applicability of Rule 2(d)(iv) of the Service Tax Rules, 1994:The Revenue contended that if the services received by the appellants were considered their property and goods, they should have filed a bill of entry for import. They argued that there was no documentary evidence to support the appellant's claim. The adjudicating authority, applying Rule 2(d)(iv) of the Service Tax Rules, 1994, held that the appellants were liable to pay service tax.3. Eligibility for credit of service tax:The appellant claimed that since they would be eligible for credit of service tax, the transaction would be revenue neutral. This aspect was considered in the case along with the nature of services transacted.4. Issue of limitation regarding the show cause notice:The appellant raised the issue of limitation as the show cause notice was issued beyond the prescribed time limits. This was a crucial point of contention in the case.In the judgment, the Tribunal reviewed the facts of the case, relevant documents, and case laws. They found merit in the appellant's argument regarding the nature of services transacted. Without delving into the merits of the case, the Tribunal allowed the stay petition and waived the pre-deposit of service tax, interest, and penalty. This decision was pronounced in court by the judges.