Unregistered technical know-how not taxable as intellectual property service; extended limitation failed without wilful suppression.

Unregistered confidential technical know-how, licence fees and allied technology-transfer payments to a foreign supplier were held not to fall within intellectual property service for service tax under reverse charge, because the taxable entry applies to legally recognised intellectual property rights such as patents, trademarks and designs. Repair and overhaul receipts were treated as taxable maintenance/repair services performed in India, so the export-of-service claim was not accepted; however, the extended period of limitation could not be invoked because wilful suppression or intent to evade duty was not established. The impugned order was set aside and the assessee succeeded on the core demand.

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Issues: (i) Whether technical know-how, licence fees and allied payments made to a foreign supplier for transfer of technology and assistance for manufacture and overhaul of aircraft engines were chargeable to service tax as "intellectual property service" under reverse charge; (ii) Whether the demand relating to repair and overhaul receipts from a foreign customer was sustainable as export of service and whether the extended period of limitation could be invoked.

Issue (i): Whether technical know-how, licence fees and allied payments made to a foreign supplier for transfer of technology and assistance for manufacture and overhaul of aircraft engines were chargeable to service tax as "intellectual property service" under reverse charge.

Analysis: The definition of intellectual property right under the Finance Act, 1994 applies only to rights in intangible property recognised under law, such as trademarks, patents, designs and similar rights, and the taxable entry for intellectual property service covers transfer or permission to use such rights. The technology transferred in the present case was confidential know-how and undisclosed information, not shown to be a registered or legally protected intellectual property right in India. The Tribunal also relied on the administrative circular and prior decisions holding that unregistered technical know-how does not fall within the taxable entry for intellectual property service.

Conclusion: The demand on this issue was not sustainable and is decided in favour of the assessee.

Issue (ii): Whether the demand relating to repair and overhaul receipts from a foreign customer was sustainable as export of service and whether the extended period of limitation could be invoked.

Analysis: The repair and rectification activity was performed in India and was therefore liable to tax as management, maintenance or repair service; the characterization of the service as export was not accepted. However, the Tribunal found no material to establish deliberate suppression or intent to evade duty, particularly having regard to the appellant's public sector character and the disclosure of the transactions in records and returns. Suppression for purposes of the extended period must be wilful and intended to evade payment of duty, which was not established on the facts.

Conclusion: The classification objection on the export issue was not accepted, but the invocation of the extended period failed, so the demand could not be sustained on limitation and the issue is ultimately decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed, with the assessee succeeding on the core tax demand.

Ratio Decidendi: Unregistered or merely confidential technical know-how is not taxable as intellectual property service, and the extended period of limitation cannot be invoked unless suppression of facts is shown to be deliberate and intended to evade duty.

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