Technical know-how licensing remains outside consulting engineering where no client-specific advisory or customised engineering engagement exists.

Licensing pre-existing technical know-how, documentation and trademarks, without a client-specific engineering advisory engagement, is characterised as a licence to use intangible intellectual property rather than Consulting Engineer Service. Engineering subject matter alone does not convert the arrangement into consultancy, particularly where the provider is not a professionally qualified engineer or engineering firm under the applicable definition. Recipient-side service-tax liability for foreign services required express statutory authority and could not be imposed through delegated legislation before Section 66A took effect. Rules concerning recipient payment did not apply absent invocation in the notice or provider authorisation to pay tax.

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Issues: (i) Whether licensing pre-existing technical know-how, technical documentation and trademarks constituted Consulting Engineer Service; (ii) Whether service tax could be levied from the recipient under reverse charge for the period 2001-02 to 2003-04, before Section 66A of the Finance Act, 1994 came into force.

Issue (i): Whether licensing pre-existing technical know-how, technical documentation and trademarks constituted Consulting Engineer Service.

Analysis: The arrangement granted a non-exclusive and non-transferable right to use pre-existing proprietary technology, know-how, technical documentation and trademarks. The provider had not been engaged to develop a client-specific engineering solution, render professional engineering advice, or undertake a customised engineering assignment. Further, it was a vehicle manufacturer rather than a professionally qualified engineer or engineering firm within the then applicable definition. The transaction was therefore a licence or transfer of the right to use intangible intellectual property, whose engineering subject matter did not by itself convert it into consultancy.

Conclusion: The licensed know-how, documentation and trademarks were not Consulting Engineer Service; this issue was decided in favour of the assessee.

Issue (ii): Whether service tax could be levied from the recipient under reverse charge for the period 2001-02 to 2003-04, before Section 66A of the Finance Act, 1994 came into force.

Analysis: Recipient liability for services received from abroad arose only upon the enactment of Section 66A with effect from 18.04.2006. Rule 2(d) of the Service Tax Rules, 1994, relied on in the adjudication order, was not invoked in the show cause notice. Rule 6 could not apply because there was no evidence that the foreign provider had authorised the assessee to pay tax on its behalf, and the agreement expressly denied any agency relationship. A levy cannot be shifted to a recipient through delegated legislation in the absence of clear statutory authority.

Conclusion: No reverse-charge service-tax liability could be imposed on the assessee for the disputed pre-Section 66A period; this issue was decided in favour of the assessee.

Final Conclusion: The licensing arrangement remained outside the taxable category invoked, and the pre-2006 statutory framework did not support recipient-side service-tax liability.

Ratio Decidendi: A licence to use pre-existing technical know-how and trademarks, without a client-specific engineering advisory engagement, is not Consulting Engineer Service; recipient liability for foreign services requires express statutory authority and cannot be imposed for the period before Section 66A.

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