TaxTMI 
TaxTMI 
2025 (4) TMI 446
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....hapter 85 of CET at their factory situated at Plot No.29-31-32, New Industrial Area No.1, Mandideep, Dist. Raisen (MP). The appellants hold Central Excise registration No. AAACC3840KM026, and were clearing the finished goods on payment of appropriate Central Excise duty. The Appellant is also engaged in providing various types of services, including service of testing, erection, installation, works contract, transportation, etc. The appellant successfully bid for a tender floated by M/s. Power Grid Corporation Ltd. [PGCIL], a Government of India Undertaking, in response to the International Competitive Bidding tender floated by PGCIL, for supply of 800 kv Shunt Reactors and 765kv Transformer. The terms of the tender floated by PGCIL required that in case of offer by a foreign bidder, the bidder should have a joint venture arrangement with a local supplier, who should be a lead partner, containing provision for transfer of technology to the local supplier. Therefore, the Appellant entered into Joint Venture agreement with foreign bidders, acting as a lead partner, with JV partners M/s. Ganz Transelektro Electric Co. Ltd. Hungary [hereinafter referred to as 'Gan....
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....ctive year in which the goods were supplied by the Appellants to PCIL was issued. The Commissioner, CGST & Central Excise, Bhopal, has adjudicated the case by passing the impugned Order-in-Original No. 14/COMMR/ST/BPL-111/2018 dated 05.07.2018. The present appeal is against the said impugned order. 3. Learned counsel submitted that the MOUs with GANZ and ZTR were entered by the Appellant in July-2008 and July-2009. The manufacture and supply of the goods commenced from 2011. Thus, even if it is assumed that GANZ and ZTR did provide technical knowhow services to the Appellants' the same were provided prior to July, 2012. He submitted that prior to July-2012, no Service Tax was payable on technical know-how service under the category of Intellectual Property Service. Learned counsel stated it was not disputed that the Commissioner has confirmed demand for service tax on technical know-how service, by treating the same as Intellectual Property Service. He submitted that during the relevant period, i.e. prior to July-2012, technology transfer service was not covered within the ambit of Intellectual Property Service. He furthe....
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....n reported in 2010 (19) S.T.R. 807 as also by the Hon'ble Delhi High Court in the case of CCEV. Consulting Engineering Services India (P) Ltd. 2013 (30) S.T.R. 586. As the service in the case of Investa Technologies S.A.R.L, was rendered prior 1o 10-9-2004, the date when the taxing entry was brought to the Statute the mere subsequent payment in respect of services that are already being rendered cannot be brought to lax with respect to the rate applicable on the date on which the payment was effected." In view of the above legal position, no Service Tax was liable to be paid by the Appellant and the impugned order deserves to be set aside and quashed. 5. In addition, learned counsel also stated that the Commissioner had erred in confirming Service Tax demand by taking the gross profit margin for the sale of the goods manufactured using the technical know-how, erroneously assuming that the entire gross profit margin is on account of the technical know-how. He submitted that profit margin was a result of various efforts and resources put to use for manufacture of particular goods, including capital, labour, management, finance, etc. Technical know-how was ....
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....the entire period covered by the demand notice was beyond normal limitation period. He submitted that in the facts and circumstances of the case there was total revenue neutrality as the Service Tax, if any paid on technical know-how on reverse charge basis, was admissible as input service credit for utilization towards discharge of Central Excise duty liability. Thus, payment of Service Tax on reverse charge basis on the value of technical know-how from ZTR and Ganz, and again taking credit of the same, was revenue neutral. Learned counsel stated that it is a settled legal position that when there is revenue neutrality with reference to the assessee himself, then no malafide intention of evasion of taxes can be attributed on the part of assessee and the extended period of limitation cannot be invoked. In support of his contention, learned counsel relied upon the following decisions: (i) Jet Airways Vs. C.S.T.- 2016(44) STR 465 (Tri- Mumbai); (ii) Texyard International Vs. C.C.E.- 2015 (40) STR 322 (Tri-Chennai); (ii) Jain Irrigation Systems Ltd. Vs. C.C.E.- 2015 (40) STR 752 (Tri- Mumbai); (iv) Mercantile & Industrial Dev. Vs. C.C.E.....
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....dundant and useless if the benefit of revenue neutrality is extended. In order to claim the substantive right/benefit of CENVAT Credit, a person has to comply with the conditions prescribed in the rules issued in this regard. 11. Learned Authorised Representative stated that the Appellant had never disclosed the facts to the Department and these facts came to the notice of the Department only at the time of investigation as the Appellant was working under self-assessment system, they were bound by service tax law to assess their service tax liability correctly and thereafter file their ST-3 returns properly. Learned Authorised Representative stated that the appellant did not assess the correct amount of service tax and had also not shown the actual amount in the relevant ST-3 returns. They have willfully suppressed the facts from the department with intention to evade the payment of service tax. Therefore, extended period and penalty under section 78 is invokable. In view of the above, he prayed that present appeal may be dismissed. 12. We have heard the learned counsel for the appellant and learned Authorised Representative for the department. The issue bef....
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..... full applicable rate. The 3rd contract also included provision of Civil Works, which were covered within Works Contract Service and on which the party paid service tax under the category of Works Contract. 15. Learned counsel has submitted before us that there was correspondence between the Appellant and the Central Excise Authorities in this regard. Thereafter, show cause notice dated 13.10.2015 was issued by the Commissioner proposing to add the value of transformers to the assessable value for the purpose of payment of service tax and accordingly proposed to demand differential service tax. The show cause notice was adjudicated by Order-in-Original dated 24.08.2016 confirming the demand of Rs.2,82,92,476/- along with interest by holding that service tax was payable on the total contract price for service of Rs. 25,71,96,000/-, and the service tax of Rs.2,07,37,860 paid was appropriated. The said order was challenged by the Appellant and the Tribunal vide its final order No.51900/2021 dated 03.09.2021 in Appeal No.ST/53026/2016 remanded the matter for computation of service tax, after having held that service tax was not payable on transportation char....
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....authorities to invoke proviso to Section 11A of the Act for making a demand of duty for the extended period. 13. Mr. Jaideep Gupta, the learned Senior Counsel for the Revenue has, on the other hand, contended that insofar as the question of related person is concerned, as the assessee had failed to give such a declaration in a separate form along with the classification list, there is, in that, suppression of fact and the authorities were justified in invoking the proviso to section 11A of the Act for demand of duty for the extended period. 14. We have indicated above the facts which make it clear that the question whether M/s. Pharmachem Distributors was a related person has been the subject-matter of consideration of the Excise authorities at different stages, when the classification was filed, when the first show cause notice was issued in 1985 and also at the stage when the second and the third show cause notices were issued in 1988. At all these stages, the necessary material was before the authorities. They had then taken the view that M/s. Pharmachem Distributors was not a related person. If the authorities came to the conclusion subsequently that it was a ....
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....se fully apply here. As earlier proceedings in respect of same subject matter were pending adjudication it could not be said that there was any suppression and the extended period under Section 11A was not available. 6. To this extent the impugned judgment requires to be and is set aside. Ordered accordingly. 7. It must also be mentioned that as there is no suppression, penalty cannot be imposed. 8. The appeal stands disposed of accordingly. There will be no order as to costs." (c) In Hyderabad Polymers (P) Ltd. vs. Commissioner of Central Excise, Hyderabad-2004 (166) ELT 151 (SC), the Hon'ble Supreme Court observed as follows: This Court has in the case of ECE Industries Limited v. Commissioner of Central Excise, New Delhi reported in 2004 (164) E.L.T. 236 (S.C.) held as follows :- "4. In the case of M/s. P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported in [2003 (153) E.L.T. 14 (S.C.) = 2003 (2) SCALE 390], the question was whether the extended period of limitation could be invoked where the Department has earlier issued show cause notices in respect of the same subject-matter. It has been held that in suc....
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....the department are dismissed. Questions of classification and marketability are left open. Parties shall bear their own costs." 19. We go on to examine this case on merits as well. We find that MoU with GANZ and ZTR were entered by the appellant is in July 2008 and July 2009. We also note that it has been submitted that the manufacture of the goods began soon after. Therefore, it is evident that GANZ and ZTR provided the technical know-how, prior to July 2012. In this context, it would be pertinent to see the definition of ''Intellectual Property Service' and 'Intellectual Property Rights' which reads as follows: "a) Section 65(55a): "intellectual property right" means any right to intangible property, namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright. b) Section 65(55b): "Intellectual property service means, - (a) Transferring, temporarily; or (b) Permitting the use of enjoyment of, any intellectual property right c) Section 65(105) (zzr) "taxable service" means any service provided or to be provided- ...... ....
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....el.), this Tribunal has observed as under :- "5. We have heard both sides and examined the appeal records. The only point for decision is that whether or not the appellant received taxable service under the category of 'Intellectual Property Right service' during the relevant period. The admitted facts of the case are that the technical Know-how, engineering design licence involved in these agreements with foreign service providers are not registered in India under Indian law. However, the original authority held that registration of IPR under Indian law is only for obtaining protection from its infringement. He observed that the levy of tax is not dependent on the fact of such registration. We find that such conclusion is not legally tenable and is beyond the scope of taxable service as defined in Finance Act, 1994 : "Section 65(105)(zzr) of the Act defines in the taxable IPR service tax as under : "Taxable service" means any service provided or to be provided to any person by the holder of intellectual property right, in relation to intellectual property service; Section 65(55a) of the Act defines 'Intellectual Property Right' to mean as ....
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....t on an annual basis is not relevant to consider as to when the services were actually rendered. It was held that the technical know-how was transferred in terms of the agreement and appellant manufacturing and selling product over a period using the technical know-how and making payment periodically will not affect the fact of one time transfer which is held to be not a taxable event as the same was prior to 10.09.2004. The Tribunal did not agree with the argument of Revenue that use of formula and the know-how will amount to continuous used service covered by the periodic payment. 6. In the case of Petronet LNG Ltd. vs. CST, New Delhi (supra) the Tribunal held that regarding taxability of appellant in respect supply of tangible goods the date of long term charter agreement will be relevant though the tangible goods were continued to be used even after the introduction of service tax liability on such service. The Tribunal held that the taxable event of supply of tangible goods for use has taken place prior to the introduction of tax on such service; and that though hire charges for the actual use were remitted subsequently and periodically, no service tax is leviable. ....