Consulting Engineer's Service classification failed where royalty payments involved intellectual property and no technical assistance was shown.

Service tax on royalty payments for trademarks, drawings, wooden models and aluminium moulds supplied by a foreign company was treated by the department as Consulting Engineer's Service. The Tribunal noted that transfer of technical know-how and similar intellectual property was prima facie outside that taxable category, and that Intellectual Property Service was introduced only after the relevant period. As the revenue did not show that the transaction squarely fell within Consulting Engineer's Service or that technical assistance was actually provided to attract the exemption notification, the appellants made out a prima facie case for interim relief and were granted waiver of pre-deposit and stay of recovery.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the disputed service tax and penalty.

Analysis: The dispute related to service tax demanded on royalty payments made for trademarks, drawings, wooden models and aluminium moulds supplied by a foreign company for manufacture in India. The demand had been raised by treating the transaction as Consulting Engineer's Service. The Tribunal noted that transfer of technical know-how and similar intellectual property was, prima facie, outside the scope of Consulting Engineer's Service, and that the taxable category of Intellectual Property Service was introduced only after the relevant period. The revenue had not shown that the transaction was squarely covered by the definition of Consulting Engineer's Service or that technical assistance was actually provided so as to attract the exemption notification relied upon.

Conclusion: The appellants established a prima facie case for interim relief and were entitled to waiver of pre-deposit and stay of recovery.

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