Appeal Dismissed: Technical Know-How Not Consulting Service. No Service Tax Before 1-1-2005.

The appeal filed by the revenue against a public sector undertaking regarding the classification of service for technical know-how received was dismissed. It was determined that the technical know-how received was for manufacturing engineering products under a mutually agreed fee arrangement, not falling under consulting engineer service. The recipient was not liable to pay service tax on services received from abroad before 1-1-2005. The impugned order was sustained, clarifying the classification of the service and the liability for service tax on services received from abroad before a specific date.

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Issues:
Classification of service under 'Consulting Engineer Service' for technical know-how received. Liability to pay service tax on services received from abroad prior to 1-1-2005.

Analysis:
1. The appeal was filed by the revenue against a public sector undertaking regarding the classification of service for technical know-how received. The original authority dropped the proposal to recover service tax as it was not classifiable under 'consulting engineer service' and the recipient was not authorized as per the Service Tax Rules, 1994.

2. The Commissioner initiated review proceedings and concluded that the consideration for technical know-how was not value for service classifiable under consulting engineer's service. The revenue contended that the service was appropriately classifiable under 'consulting engineer service', citing a pending appeal before the Apex Court against a similar decision.

3. The respondent argued that the classification for technical know-how had been settled by previous Tribunal decisions. They referred to various cases supporting their position, highlighting that the recipient was not liable to pay service tax on services received from abroad before 1-1-2005, as per a decision by a Larger Bench of the Tribunal.

4. After considering the submissions and facts, it was established that the technical know-how received by the public sector undertaking was for manufacturing engineering products under a mutually agreed fee arrangement. The transaction involved the sale of patented technology for licensed products, not falling under consulting engineer service. Additionally, the recipient was not liable to pay service tax on services received from abroad before 1-1-2005.

5. Consequently, the appeal filed by the revenue was dismissed as lacking merit, and the impugned order was sustained. The cross-objection filed by the respondents was also disposed of accordingly. The judgment clarified the classification of the service and the liability for service tax on services received from abroad before a specific date.

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