Royalty for technical know-how not taxed as Consulting Engineer's Service for the pre-10-9-2004 period; pre-deposit waived.

Pre-deposit of service tax, interest and penalties on royalty paid to technical collaborators for the period before 10-9-2004 was waived, and recovery was stayed, where the demand proceeded on the view that the royalty constituted consideration for technical assistance taxable as Consulting Engineer's Service. The Tribunal noted the appellants' case that the payment was royalty linked to ex-factory sale price and that transfer of technical know-how was not taxable as Consulting Engineer's Service for the relevant period. Prior Tribunal decisions supporting that view were cited, and no binding contrary decision was shown.

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Issues: Whether pre-deposit of the service tax, interest and penalties demanded on royalty paid to technical collaborators for the period prior to 10-9-2004 should be waived and recovery stayed.

Analysis: The demand was founded on the view that the royalty represented consideration for technical assistance and was taxable as Consulting Engineer's Service. The Tribunal noted the appellants' contention that the amount was royalty linked to ex-factory sale price and that transfer of technical know-how was not taxable as Consulting Engineer's Service for periods prior to 10-9-2004. It was also noted that prior Tribunal decisions supporting this view had been cited and no binding contrary decision was shown.

Outcome: Waiver of pre-deposit granted and recovery of the service tax, interest and penalties stayed.

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