Appellant not liable for pre-2006 service tax under reverse charge. Foreign tech know-how not taxable.

The Tribunal held that the appellant is not liable to discharge service tax liability under the reverse charge mechanism for the period before 18.04.2006. The demand raised for Intellectual Property Rights services was deemed unsustainable as the technical know-how provided by a foreign company not registered under Indian laws does not attract service tax liability. The Tribunal set aside the impugned orders and ruled in favor of the appellant based on established legal precedents.

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Issues:
1. Whether the appellant is liable to discharge service tax liability under reverse charge mechanism for the period from 10.09.2004 to March 2013.
2. Whether the demand raised on the appellant under the category of Intellectual Property Rights services is sustainable.
3. Whether the tax liability under reverse charge mechanism arises for the period prior to 18.04.2006.
4. Whether the service tax liability for technical know-how provided by a foreign company, not registered under Indian laws, attracts service tax.

Analysis:
1. The appellant, a manufacturer of Air and Gas separation plants, obtained technical knowhow from a foreign company and paid royalty charges. The Department issued a show-cause notice for the demand of duty under the category of IPR services. The appellant argued that the tax liability under reverse charge mechanism for the period prior to 17.04.2006 is not sustainable, citing legal precedents. The Tribunal held that for the period before 18.04.2006, no tax liability arises under reverse charge mechanism, based on the law established by the Apex court in a specific case.

2. The demand raised under the category of Intellectual Property Rights services was based on the argument that the technical knowhow provided by the foreign company constituted their proprietary interest. The Tribunal referred to previous judgments, including one involving the same Member, to establish that for service tax liability to apply, the person providing the technical know-how must be registered with the Patents Authority in India. If the IPR is registered in a foreign country but not in India, it does not attract service tax liability under the reverse charge mechanism.

3. The Tribunal found that the issue of charging service tax on the recipient under the reverse charge mechanism only arises post 18.04.2006. Therefore, for the period prior to this date, no demand arises on the appellant. The Tribunal based this decision on the law settled by the Apex court in a specific case.

4. The Tribunal concluded that the impugned orders were unsustainable and set them aside, allowing the appeals. The judgments in previous cases were cited to support the decision that the technical know-how provided by a foreign company, not registered under Indian laws, does not attract service tax liability under the reverse charge mechanism. The Tribunal found that the issue was well-established in previous cases and, therefore, ruled in favor of the appellant.

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