Tribunal Upholds Order: Service Tax on Consulting Engineering & Royalty Payment Set Aside

The Tribunal upheld the impugned order, setting aside the demand of service tax on consulting engineering service and royalty payment. It rejected the claim for service tax on technical support fee, emphasizing that new issues cannot be raised at a later stage.

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Issues:
1. Whether the demand of service tax on consulting engineering service is valid.
2. Whether the technical support fee is liable for service tax.
3. Whether the royalty payment made for transfer of technology is subject to service tax.

Analysis:
1. The appeal was filed against the demand of service tax on consulting engineering service. The revenue argued that the technical support fee paid by the respondent is covered under consulting engineering service. However, the respondent contended that the issue of service tax on technical support fee was not raised in the show cause notice, and therefore, cannot be introduced at this stage. The Tribunal agreed with the respondent, stating that a fresh issue cannot be raised at this stage, and upheld the impugned order setting aside the demand of service tax on consulting engineering service.

2. Regarding the technical support fee, the revenue claimed that it is liable for service tax as it pertains to technical assistance received by the respondent. However, since this issue was not part of the show cause notice and was raised for the first time before the Tribunal, the Tribunal sided with the respondent's argument that a new issue cannot be introduced at this stage. Therefore, the Tribunal did not uphold the demand for service tax on technical support fee.

3. The case also involved the question of whether the royalty payment made by the respondent for transfer of technology is subject to service tax. The Commissioner (Appeals) had ruled that the royalty payment was for transfer of technology and not for any service rendered by the foreign service provider. The Tribunal, after reviewing the terms of the agreement and considering past decisions, found no issue with the impugned order and dismissed the appeal, stating that the royalty payment for transfer of technology is not subject to service tax.

In conclusion, the Tribunal upheld the impugned order setting aside the demand of service tax on consulting engineering service and royalty payment, and rejected the claim for service tax on technical support fee, emphasizing that new issues cannot be raised at a later stage.

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