AI Drafter 
TaxTMI 
TaxTMI 
2005 (12) TMI 560
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....ld be obliquely taken as a service received by them which can attract service tax. 2. The Assistant Commissioner, Central Excise, Gwalior decided the matter in favour of the Revenue confirming the demand, imposing penalty and charging interest. However, when the matter was taken up before the Commissioner (Appeals), Indore, by the aggrieved appellants, it took a different turn. He observed that the issue to be decided relates to service tax payable on the royalty payments made by the appellant to the foreign collaborator in terms of the agreement between them. After scanning the agreement, he observed : "It is clear that in respect of engineering service if any, rendered by the foreign collaborator payment for such service has to be made based on the invoice for the same". In this context he also observed that in the show cause notice or in the impugned order, there is no mention of such invoices raised by the foreign collaborator whereas the entire demand raised in the show cause notice only related to the royalty payments made by the appellant to their foreign collaborator as per the agreement. It was also held by the Commissioner (Appeals) that the payment of the royalty....
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....otification No. 18/2002 which exempts the taxable services provided by a consulting engineer to a client on transfer of technology from so much of the service tax leviable thereon as is equivalent to the amount of cess. According to him, this notification gives a broad idea of the taxability of the services such as transfer of technology, etc. found covered under the existing service tax legislation. 6. The learned counsel for the respondents clarifies that the royalty amount was paid by them for what he calls as technical know-how of upgrading the technology of their production activities. The definition of the term "royalty" as defined in Concise Oxford Dictionary 9th Edition clarifies the position. In the context of patent, the term 'royalty' is defined as a sum paid to a patentee for the use of a patent or to an author, etc., for each copy of a book etc. sold or for each public performance of a work". In the case of mining activities, the term refers to a "payment made by a producer of minerals, oil or natural gas to the owner of the site or of the mineral for the right over it". From the above definition it is clear that in the commercial vocabulary, the term 'royal....
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....re intellectual property and trading in them is not rendering any service, but is transfer of property. It is also being contended that the issue raised in this appeal remains covered in favour of the appellants by the judgment of this Tribunal in the case of M/s. Bajaj Auto Ltd. v. CCE & C, Aurangabad - 2005 (179) E.L.T. 481 (T) = 2004 (65) RLT 857 and Navinon Ltd. v. CCE, Mumbai-VI - 2004 (172) E.L.T. 400. It is being pointed out that the very issues came up for consideration in Bajaj Auto Limited and the Tribunal held that royalty paid towards right to use trade mark is not consultancy or advice and not subject to levy of service tax on engineering consultancy." (d) Yamaha Motors (India) P. Ltd. v. CCE. Delhi-IV reported in 2005 (186) E.L.T. 161 (T) = 2005 (70) RLT 414. It was held here that in transfer of intellectual property such as design, patent and utility models under agreement the relationship between the parties is not of consultant and client, but seller and buyer of assets - royalty for using trade mark and not for any consultancy. 8. The learned authorised representative of the department for the Revenue relies upon the following ju....
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.... We cannot, therefore, accept the contention raised by the petitioner that such engineers who offer the advice in their capacity as the "registered valuers" of immovable property or plant and machinery cannot be brought into the tax-net under Section 65(11) read with Section 65(48)(g) of the Finance Act. We do not find any merit in the petition and would dismiss the same." (b) M.N. Dastur & Company Ltd. v. Union of India reported in 2002 (140) E.L.T. 341 (Cal.) (Para 15), relied upon reads : "After considering the facts and circumstances of this case I do not have any hesitation to accept the contention of Mr. Roy Chowdhury and express the same view as has been expressed by their Lordships in "V. Shanmughavel (Dr.) v. Commissioner of Central Excise, Chennai-II." Therefore, when an engineer gives his advice or when engineer form an association or a firm or a company consisting of engineers rendering their service or services as "consulting engineer" within the meaning of Section 65(72)(g) of the Finance Act cannot have separate footing than that of the definition given in the said section. Therefore, I specifically hold that the petitioners ....