Assessee not liable for service tax on royalty charges for technology transfer. Court lacks jurisdiction on tax issues.

The High Court held that the assessee was not liable to pay service tax for royalty charges paid for technology transfer, as it was for the grant of rights to use technical information. The Court lacked jurisdiction to decide on the rate of duty/tax issues, directing the Revenue to appeal to the Apex Court for such matters. The appeal was rejected, and certified copies of the orders were to be returned to the Department for further action.

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Issues:
1. Whether the assessee is liable to pay service tax under the agreements.
2. Jurisdiction of the High Court to adjudicate on the issue of rate of duty/tax.

Analysis:
1. The case involved an appeal by the revenue against a Tribunal order that held the assessee not liable to pay service tax for royalty charges paid for technology transfer. The assessee contended that the payment was for the grant of rights to use technical information and intellectual property for manufacturing patented goods, not a service. The Assistant Commissioner initially dropped proceedings, but the Commissioner later levied service tax, interest, and penalty. The Tribunal, in line with previous judgments, ruled in favor of the assessee, prompting the revenue's appeal. The High Court considered whether the assessee was liable to pay service tax under the agreements.

2. The High Court determined that the question of whether the assessee was liable to pay service tax fell within the exception under Section 35G, which pertains to the rate of duty/tax determination. Citing a previous case, the Court clarified that it lacked jurisdiction to decide on such issues, as the appeal should be directed to the Apex Court under Section 35L of the Central Excise Act, which holds exclusive jurisdiction over rate of duty/tax matters. Consequently, the High Court rejected the appeal as not maintainable, allowing the Revenue to approach the Apex Court. The Court directed the High Court registry to return certified copies of the orders to the Department for the appeal process.

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