Technology Transfer Agreement Not Subject to Service Tax

The Tribunal found that the appellant's agreement with M/s Akash Broadband Ltd. was for technology transfer, not consulting engineering services. As the appellant developed and sold the Gramdoot Project for ownership transfer, the demand for Service Tax was deemed unsustainable. Consequently, the Tribunal allowed the appeal, setting aside the Service Tax demand.

---

---

Issues:
1. Whether the appellant provided the service of consulting engineering.
2. Whether the demand of Service Tax on the appellant is sustainable.

Analysis:
1. The appellant filed an appeal against an order confirming the demand of Service Tax on the ground that they provided the service of consulting engineering. The appellant developed technical know-how for e-governance and rural governance in rural India, named as Gramdoot Project, which was sold to M/s Akash Broadband Ltd. through an agreement. The appellant argued that the agreement was for the transfer of technical know-how, not for consulting engineering services. The Revenue contended that the agreement involved advising for setting up the Gramdoot Project, making the appellant liable for Service Tax as a provider of consulting engineering services.

2. The Tribunal examined the definition of consulting engineering under Section 65(ii) of the Finance Act, which includes rendering advice, consultancy, or technical assistance in engineering disciplines. Upon reviewing the agreement, it was found that the appellant had developed and launched the Gramdoot Project, which was sold to M/s Akash Broadband Ltd., including the transfer of ownership for consideration. The agreement was specifically for technology transfer, not for providing technical know-how services. Therefore, the Tribunal concluded that treating the appellant as a provider of consulting engineering services was not sustainable. As a result, the demand for Service Tax was set aside, and the appeal was allowed.

---