Trademark and design royalty arrangement not treated as Consulting Engineer service; incidental technical support was insufficient.

Permitting use of trademark and design in return for royalty, even with associated technical know-how, supervision and marketing support, was not treated as rendering engineering consultancy. The arrangement was characterised as a transaction in property for use of intellectual property rights, and the incidental technical assistance did not establish engineering advice or consultancy within the taxable entry. On that basis, the activity was held outside the scope of Consulting Engineer service, and the service tax demand could not be sustained.

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Issues: Whether permitting use of trademark and design, along with associated technical know-how, supervision and marketing support, amounted to taxable service as a Consulting Engineer under the Finance Act.

Analysis: The arrangement was one for use of trademark and design in return for royalty. The assessee did not render engineering consultancy merely because some technical know-how or incidental assistance was involved. Royalty for use of trademark was treated as a transaction in property, and the activities described in the agreement were not shown to constitute engineering advice or consultancy within the scope of the taxable entry.

Conclusion: The activity did not fall within the service category of Consulting Engineer, and the demand of service tax was unsustainable.

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