Technical know-how transfer not taxable as Consulting Engineer's Service; service tax demand and penalties set aside.

Technical know-how fee paid to foreign collaborators for transfer of know-how was held not to fall within Consulting Engineer's Service for service tax purposes. The dispute was treated as covered by earlier Tribunal decisions, which had already settled that transfer of technical know-how for upgrading manufacture is not taxable under that category. On that basis, the service tax demand could not survive, and the related penalties were also unsustainable. The demand and penalties were therefore set aside in favour of the assessee.

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Issues: Whether the technical know-how fee paid to foreign collaborators for transfer of know-how could be subjected to service tax under the category of Consulting Engineer's Service, and whether the consequent demand and penalties were sustainable.

Analysis: The dispute concerned levy of service tax on consideration paid for transfer of technical know-how for upgrading manufacture. The issue was treated as already covered by earlier Tribunal decisions holding that transfer of technical know-how does not fall within Consulting Engineer's Service for service tax purposes. In view of that settled position, the impugned demand could not survive.

Conclusion: The demand of service tax and the penalties were set aside, and the appeal was allowed in favour of the assessee.

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