TaxTMI 
TaxTMI 
2006 (2) TMI 18
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Notification No. 18/2002-S.T., dated 16-12-2002 to the extent of the amount paid as Research & Development Cess on account of transfer of technology under Section 3 of the Research and Development Cess Act, 1986 (32 of 1986)." 3. The appellant had paid the service tax filing returns in respect thereof in form ST-3 for the half year ending 31-12-2002 along with TR-6 challan dated 24-12-2002 for Rs. 10,56,648/-. The returns of service tax credited to the Government of India were for the periods from 1-7-2002 to 31-12-2002, and 1-10- 2002 to 31-3-2003, and it was stated therein that the category of services was 'consulting engineer' (engineering consultancy taken from a foreign company). It was mentioned in the return that the particulars were given in accordance with the records and books maintained by the appellant and were correctly stated and that the appellant had assessed and paid the service tax correctly in terms of the provisions of the Act and the rules made there under. It was stated that the appellant was exempted from making payment of service tax on the amount paid to NKK Japan (the foreign service provider) in terms of Notification No. 18/2002- ST dated 16-12-2002 4.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant had filed the refund claim of the said amount on 4-7-2003, in respect of which the show cause notice dated 15-1-2004, was issued. It was contended in the reply that any kind of transfer of technology was one kind of technical assistance and that the scope of service provided by NKK Corporation, Japan was specified in Annexure-2 to the first agreement and Annexures-1 and 2 to the second agreement. It was submitted that the definition of the term "technology" was not given in the pro visions of the Service Tax Act or the exemption notification dated 16-12-2002, and therefore its meaning was to be derived from the definition contained in Section 2(h) of the Research & Development Cess Act, 1986 as per which, "technology" means any special or technical knowledge or any special service required for any purpose whatsoever by an industrial concern under any one collaboration, and included designs, drawings, publications and technical personnel. It was further submitted that NKK Corporation had undertaken to provide nothing but transfer of special technical knowledge/service required by the appellant as an industrial concern under the collaboration including designs, drawing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....notification. It was held that the notification issued by the Government of India did not have retrospective effect and operated prospectively from the date of its publication. The refund claim was, therefore, rejected on the ground that exemption equivalent to the R & D cess paid under the provisions of the R & D Cess Act was not available to the appellant as the services on which exemption was sought pertained to the period prior to the date of that notification. 6.1 The Commissioner (Appeals) after considering all the relevant aspects of the matter noted that the main issue to be decided in the case was whether the Notification No. 18/2002-S.T., dated 16-12-2002, had a retrospective effect. It was held that the said notification exempted the taxable services provided by a consulting engineer to a client on transfer of technology from so much of service tax leviable under Section 66 as was equivalent to the amount of cess paid on or after 16-12-2002, and that there was no indication in the notification that it would have retrospective effect. Since the service tax was paid on the basis of the invoice dated 2-10-2002 issued by the foreign service provider NKK Corporation, the pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s entitled to get the refund of service tax which was paid under protest. 7.1 In support of her contention, the learned counsel for the appellant placed reliance on the following decisions: (A) The decision of the Tribunal in Yamaha Motors (I) Pvt. Ltd. y. Com missioner of Central Excise, Delhi-I V (Faridabad) reported in 2005 (186) E.L.T. 161, was cited for the proposition that the agreement for licensing the transfer of intellectual property rights which included teaching services which formed part of transfer of know-how, did not amount to consultancy service since it was a transfer of intellectual property. It will be seen from paragraph 7 of the judgment that the Tribunal had found on facts that the relationship between the parties was not one of consultant and client, but seller and buyer of assets. In paragraph 9 of its judgment, the Tribunal acknowledged the proposition laid down in Baja) Auto Ltd. and Aviat Chemicals Pvt. Ltd. etc. that if a manufacturer undertakes consultancy in. addition to manufacture, it will be liable to tax in regard to the service rendered and held that the said proposition had no application to where the agreement was, as in the case before it, f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce tax for the period in dispute could only be legally claimed/recovered from the service provider. Arguments on behalf of the Revenue: 8. The learned authorized representative for the department supporting the reasoning and conclusions reached by the authorities below contended that the appellant cannot be allowed to raise a ground which never was raised and the appeal is required to be decided only on the basis of the record and the nature of the claim, as decided by the authorities below. He submitted that the appellant cannot go beyond the scope of the application for refund made by was argued that the self-assessment made by the appellant had become final there was no need for any regular assessment when the self assessment was accepted. The only protest was on the ground that refund claim would be admissible in view of the exemption notification issued on 16-12-2002. Referring to various clauses of the agreement, he submitted that the service tax was rightly considered' to be payable by the appellant. It was submitted that all the cases on which reliance was placed on behalf of the appellant related to demand of - vice tax prior to 16-8-2002 and could, therefore, have no ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y of which is on record. As per that invoice which was sent to the appellant as per the agreement for technical assistance for rail and universal rail beam mill at Raigarh Works (Stage 1) dated April 10, 2001, the service tax "for deposit" to the tune of 2,631,750 Yens was clearly added. This amount in Yen as calculated by both sides tallies with the amount of service tax paid by the appellant. This amount which was added in the invoice as service tax in respect of technical assistance rendered by the service provider was the liability of the service provider and, therefore, it was sought to be collected under the invoice by adding it to the total amount payable by the appellant. However, this amount was actually paid by the appellant instead of sending it to the foreign service provider in view of the specific stipulations reached between them in the agreement for technical assistance. 11. The relevant terms of the technical assistance agreement which has a bearing on this aspect are reproduced hereunder from the copy of the agreement which is on record "5.1 All the payments under ARTICLE 4-1 shall be net receivable by NKK i.e. after payment of Income Tax, Service tax/R&D Cess o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f remitting it to the foreign party-service provider NKK Corporation, Japan, as required by Article 5.3, credited it to the Central Government by filing the return to discharge the statutory liability of the service provider in respect of the value of the taxable service. The service provider instead of collecting service tax from the appellant as per the invoice dated 2-10-2002 had imposed an obligation on the appellant to pay that amount in the treasury, as contemplated in Article 5.1 which provided that in the case of taxes payable by NKK Corporation, i.e., the foreign service provider, they would be borne by JCPL, i.e., the appellant and that the JCPL agreed to bear such amount of service tax specified in para 5.3. The appellant by paying the amount of service tax as per the invoice had in fact discharged the liability of the service provider pursuant to the obligation to do so, which was undertaken by the appellant under clauses 5.1 read with clause 5.3 of the agreement. If the appellant had not done so, it would have become liable to the service provider under Article 5.4 of the agreement. It cannot, therefore, be said that the service tax was erroneously paid or that it was....