Service tax on foreign technical know-how fee fails where the provider had no office in India before 1.1.2005.

Service tax on technical know-how fee paid to a foreign collaborator for 2002-03 to 2003-04 under Consulting Engineer's service was held unsustainable because the Tribunal's Larger Bench had already ruled that, for periods before 1.1.2005, a taxable service provided by a non-resident or from outside India without an office in India was not exigible to service tax in the hands of the recipient in India. That principle was treated as directly applicable to the demand in issue, and the associated penalty was also set aside.

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Issues: Whether service tax was leviable on technical know-how fee paid to a foreign collaborator during 2002-2003 to 2003-2004 under the category of Consulting Engineer's service.

Analysis: The liability had already been settled against the Revenue by the Tribunal's Larger Bench, which held that a taxable service provided by a non-resident or from outside India, without an office in India, was not exigible to service tax in the hands of the recipient in India for the period prior to 1.1.2005. That ruling was applied as squarely governing the present demand raised under the same service category.

Conclusion: The demand of service tax and the accompanying penalty were unsustainable and were set aside.

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