Technology transfer payment not taxable as Consulting Engineer Service where no advisory or consultancy service was rendered.

Consideration paid under an intergovernmental technology transfer agreement was held not taxable as Consulting Engineer Service on reverse charge basis because the foreign supplier was providing technology transfer and allied technical assistance, not advisory or consultancy services rendered by a consulting engineer. The statutory definition requires advice, consultancy or technical assistance in an engineering discipline, and that character was absent on the facts. The demand, penalties and related tax consequence were therefore unsustainable, and the assessee obtained consequential relief.

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Issues: Whether the consideration paid for transfer of technology and allied technical assistance under an intergovernmental agreement was taxable under Consulting Engineer Service on reverse charge basis.

Analysis: The payment was found to relate to transfer of technology under the agreement and not to receipt of consulting engineering services in relation to business or commerce. The statutory definition of consulting engineer contemplates advice, consultancy or technical assistance rendered by a consulting engineer in one or more disciplines of engineering. On the facts, the foreign supplier was not found to be providing such a taxable consulting engineering service to the appellant, and the transaction was treated as one of technology transfer rather than a taxable consultancy arrangement.

Conclusion: The demand under Consulting Engineer Service on reverse charge basis was not sustainable and the finding was in favour of the assessee.

Final Conclusion: The impugned demand, penalties and related tax consequence could not be sustained, and the appeal succeeded with consequential relief.

Ratio Decidendi: A payment made for transfer of technology under an agreement, where the transaction is not one for advisory or consultancy services rendered by a consulting engineer, does not attract service tax under Consulting Engineer Service on reverse charge basis.

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