Royalty for technology transfer is not consulting engineer service under service tax law, following prior Tribunal rulings.

Royalty charges paid for transfer of technology and use of know-how were held not taxable as consulting engineer service under service tax law. The Tribunal followed earlier coordinate bench rulings that payment for know-how, royalty, or use of a trade mark reflects a transaction in property, not consultancy or advice, and treated judicial discipline as requiring the same result. The department's reliance on Notification No. 18/02-ST dated 16-12-02 and the reference to cess under Section 3 of the Research and Development Cess Act, 1986 was not accepted as a basis to alter that position on the facts considered in prior rulings.

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Issues: Whether royalty charges collected for transfer of technology / use of know-how are taxable as consulting engineer service under service tax law.

Analysis: The Tribunal held itself bound by earlier coordinate bench decisions which had consistently ruled that payment of know-how and royalty does not amount to consultancy or advice, and that right to use a trade mark or technology transfer is a transaction in property rather than a consulting service. It further noted that a contrary view would offend judicial discipline. The department's reliance on Notification No. 18/02-ST dated 16-12-02 and the reference to cess under Section 3 of the Research and Development Cess Act, 1986 did not justify a different conclusion on the facts found in the earlier rulings.

Conclusion: Royalty paid by the assessee was not liable to service tax under consulting engineer service.

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