TaxTMI 
TaxTMI 
2005 (5) TMI 1
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....r Inc 235 East 42 Street New York USA (hereinafter referred to as Pfizer) a foreign company. They hold 40% stake in the appellant-company and in the Capacity of an investor/promoter of the appellant-company agreed to disclose Technical know-how to the appellant in relation to certain pharmaceutical products as also allowed the use of the patents held for the products. The appellants made consequent payments for the same after the Reserve Bank of India approvals. 1.2 During the period 1997-98 & 2000-01, to the agreements for the use of the patented Technology an amount of Rs. 21.26 crores was paid to Pfizer. A cess @ 5% under R&D Cess in the said amount to Pfizer as Royalty and know-how fee. 1.3 Department has on 5-7-2002, issued a not....
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.... which has caused for the payments, reveals that the same Licences, with conditional rights, and cannot be considered to be tendering any service. The lower authorities have relied upon the stipulation in the Agreement to the effect that the appellants will bear the taxes. The mere agreement to bear the incidence of Tax if any, cannot render the consideration of a service receiver and become and be understood as 'Service provider', especially in light of the decision by the Apex Court in the case of Laghu Udyog Bharati & Ors - 1999 (112) E.L.T. 365 (S.C.). The appellants submit - "that for the levy of Service Tax to be sustained under the taxing entry for "Consulting Engineers" Services, set out in Sections 65(31) and 65(10....
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.....C.) Trade Notice No. 7/97-S.T., dated 4-7-1997, issued by the Mumbai Commissionerate-I, provides as below :- "The services which attract the levy to include all the services which are rendered in the capacity of a professional person and specifically includes the services pertaining to structural engineering works, civil/mechanical/electrical works or relating to engineering construction management. All services rendered within the above scope of the term 'engineering' attract service tax provided they are rendered in the capacity of a consulting engineer. The scope of the services of a consultant may include any one or more of the following categories :- • Feasibility report; • Pre-desig....
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.... It is further submitted that an examination of the definition of "Consulting Engineer's services" indicates that the advice, consultancy or technical assistance sought to be covered is in respect of one or more disciplines of engineering. In the present case, the subject matter of the transaction is the grant of a license for use of know-how in the manufacture and marketing of various pharmaceutical products. Such "know-how" is the subject of an intellectual property right. It is submitted that the ld. Commissioner (Appeals) has failed to appreciate that the "know-how" is an intellectual input into how certain pharmaceutical products can be manufactured and such "know-how" does not fall within one or more disciplines of engineering.....
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....learly not the case in the transaction between the Appellants and Pfizer. The term "client" is not defined under the Act and has to be examined as per its dictionary definitions. "Client" has been defined as : "an individual, corporation, trust or estate that employs a professional to advice or assist it in the professional's include but are not limited to attorneys, accountants, architects etc." (Black's Law Dictionary) 'a person who engages the professional advice or services of another.' (Merriam Webster's Collegiate Dictionary) The dictionary meaning of the word 'client' thus suggest that a 'client' is a person who hires, engages or employs services of a professional. ....