2005 (2) TMI 8

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....y, which was set up for manufacture, in India, of friction materials for clutch systems for motor vehicles, entered into a 'Technology Licence Agreement' with the French company on 11-2-1998. Under Article 2 of this agreement, the French company was to transfer the required technology to the respondents (joint venture Company) on an exclusive, non-transferable, non- assignable basis for the purpose of manufacture and sale of the aforesaid products in India. Under Article 12 of the agreement, the respondents were to pay to the foreign company a royalty of 3.75% of the annual net sales value of products sold by the company in India during the seven-year period commencing on 1st January 2000, as consideration for the transfer of technology pur....

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....spondents to the foreign company as consideration for transfer of technology by the latter to the former in terms of Articles 2 and 12 of the agreement. These provisions of the agreement did not refer to any service. The show cause notice, obviously, treated the transfer of technology as a service and brought it within the ambit of "consultancy, advice or technical assistance" within the meaning of these terms occurring in Clause 15 of Section 65 of the Finance Act, 1994. Neither Article 2 nor Article 12 made mention of consultancy, advice or technical assistance. They had only provided for transfer of technical know-how from the foreign company to the joint venture company and for payment of consideration for the same by the latter to the ....