Prospective application of service tax notification upheld as technical know-how transfer secured unconditional waiver and stay of recovery.

Transfer of technical know-how was treated as a strong prima facie case for the appellants, as the Tribunal found the activity appeared to fall within the amended intellectual property services category. It also held that Notification No. 18/2002-S.T. could operate only prospectively and could not be applied to the disputed period. The lower appellate order was not a speaking order because it failed to address all grounds raised. On that basis, unconditional waiver of pre-deposit was granted and recovery stayed pending disposal of the appeal.

---

---

Issues: Whether the appellants were entitled to unconditional waiver of pre-deposit and stay of recovery in a service tax appeal concerning transfer of technical know-how.

Analysis: The Tribunal found that the lower appellate order did not deal with all the grounds raised and therefore could not be treated as a speaking order. It noted that the appellants were registered under the Research and Development Cess Act, 1986 and that the licence involved transfer of technical know-how. Prima facie, the activity appeared to fall within the intellectual property services category introduced by the amended law. The Tribunal also held that Notification No. 18/2002-S.T., relied upon by the Revenue to bring technical know-how under consulting engineer services, could operate only prospectively and could not govern the period in dispute.

Conclusion: The appellants established a strong prima facie case and were granted unconditional waiver of the pre-deposit, with recovery stayed pending disposal of the appeal.

---