2008 (6) TMI 31 - AT - Service Tax

CESTAT Chennai: Royalty payments not taxable as service tax, ruling in favor of appellants

The Appellate Tribunal CESTAT, Chennai ruled in favor of the appellants, waiving the demand of service tax on royalty payments made to technical ... Demand, interest and penalty from the appellants on royalty paid by them to their technical collaborators for the period 1999-2001 in the category of ‘Consulting Engineer’s Service’ - learned counsel has cited a plethora of decisions of the Tribunal holding that transfer of technical know-how was not to be taxed as ‘consulting engineer’s service’ for periods prior to 10-9-2004 - Therefore, there will be waiver of pre-deposit and stay of recovery in respect of the tax, interest and penalties The Appellate Tribunal CESTAT, Chennai ruled in favor of the appellants, waiving the demand of service tax of Rs. 9,63,006 on royalty payments made to technical collaborators for the period 1999-2001. The tribunal found that the royalty payments were not subject to service tax as they were considered percentages of ex-factory sale price of finished goods, not technical assistance. The waiver included service tax, interest, and penalties.