TaxTMI 
TaxTMI 
2025 (12) TMI 716
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....Group Companies'). The agreements were entered into by the appellants for purchase of technical know-how from the group companies, which were to be used for the manufacture of WTGs by the appellants in India. The details of the agreements are placed in the form of a table, as below: Name of party Date of Agreement Scope under the agreement Suzlon Energy GmbH, Germany 01.04.2007 Import of Intellectual Property Rights / technical know-how in respect of all models of WTGs to be manufactured in India consisting of designs and development of all models. AE Rotor Holding BV, Netherlands 01.08.2008 Import of Intellectual Property Rights / technical know-how in respect of moulds and plugs for rotor blades, nacelle cover and nose cone of WTG to be manufactured in India consisting of designs and development of all models. Suzlon Blade Technology BV, Netherlands 01.10.2009 Import of Intellectual Property Rights / technical know-how in respect of moulds and plugs for rotor blades, nacelle cover and nose cone of WTG to be manufactured in India consisting of designs and development of all models. 1.3 The appellants had impor....
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....k-up of the proposed demand of service tax in the SCNs are as under: Party Invoiced Amount (Rs.) Service Tax (Rs.) Suzlon Energy GmbH, Germany 146,71,23,396/- 16,10,28,945/- AE Rotor Holding BV, Netherlands 7,07,13,508/- 87,40,190/- Suzlon Blade Technology BV, Netherlands 46,75,63,413/- 4,81,59,032/- Total 200,54,00,317/- 21,79,28,167/- 1.5 The matter arising out of the above SCNs dated 15.12.2011 and 20.04.2012 were adjudicated by the learned Commissioner, Central Excise & Service Tax, Pune-III Commissionerate, vide the Order-in-Original No. 31-32/P-III/ST/COMMR/2012-13 dated 25.03.2013 (for short, referred to as 'the impugned order'), wherein the proposals made therein for recovery of the service tax demand along with interest were confirmed in entirety. Besides, the impugned order has also imposed penalties under Section 77 and 78 of the Act of 1994 on the appellants. In support of confirmation of the adjudged demands on the appellants, the learned adjudicating authority has recorded the following findings in the impugne....
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....f service tax thereon under the reverse charge mechanism. 1.7 Feeling aggrieved with the order dated 02.05.2018 of the Tribunal, Revenue had filed Civil Appeal before the Hon'ble Supreme Court, which was disposed of vide judgment dated 10.04.2023 by way of remanding the matter to the Tribunal, for consideration of the issues framed therein. The matter was remanded back to the Tribunal for examination of the appeals on the following issues: (i) Whether the services, (if any), in context with importation of various models of "Engineering Design & Drawings" rendered by a foreign entity, would fall within the purview of "design services", defined under Section 65(35b) read with Section 65(105)(zzzzd) of the Act of 1994, for the purpose of manufacturing of Wind Turbine Generator by the appellants? (ii) Whether the department was justified in invoking the extended period of limitation? 2. Pursuant to the remand directions contained in the above judgement dated 10.04.2023 of the Hon'ble Supreme Court, these appeals are being taken up for hearing, for addressing the above two issues, based on the factual matrix of the case vis-à-vis the statutory provis....
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.... Service Tax, Jamshedpur - 2010 (18) S.T.R. 632 (Tri. - Kolkata) (ii) Mitsui & Co. Ltd. Versus Commissioner of Central Excise & Service Tax, Jamshedpur - 2012 (28) S.T.R. 491 (Tri. - Kolkata) (iii) M/s. Solitz Corporation Versus CST., New Delhi - 2009 (14) S.T.R. 642 (Tri. - Del.) (iv) Associated Cement Companies Ltd. Versus CC - 2001 (128) E.L.T. 21 (SC) (v) M/s. Bharat Aluminum Company Ltd Vs. Commissioner of Central Excise, Raipur - 2017-TIOL-1983-CESTAT-DEL (vi) Commissioner of Central Excise, Pune-II Vs. Kirloskar Brothers LD - 2013-TIOL-1456-CESTAT-MUM (vii) V.D. M. Rm. M. Rm. Muthiah Chettiar V. Commissioner of Income Tax - [1969] 74 ITR 183 (SC) (viii) The Commissioner, Central Excise and Customs and another versus M/s Reliance Industries Ltd - 2023 (7) TMI 196 - Supreme Court (ix) AAK India Pvt. Ltd. Vs. Commissioner of Central Excise and Service Tax, Raigad - Final Order No. A/85716/2025 dated 01.04.2025. (x) Commissioner of Central Excise, Delhi-III versus Microtek Forgings - 2016 (341) E.L.T. 218 (P & H) (xi) M/s. HPL Electric and Power Pvt. Ltd. versus CCE, Delhi-I - 2018 (10) TMI....
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.... 2. SEL wants to purchase Product (s) for all models of WTGs to be manufactured in India from a suitable developer having experience in this regard. SEG has sufficient infrastructure and technological capability and adequate professionals to develop the Product(s). 3. SEG agrees to sell and transfer to SEL, all of SEG's rights (including Intellectual Property Rights), title and interest in and to Product(s) and any part thereof for the purpose of manufacturing WTGs restricted to the Indian Territory only. In addition, SEG agrees to assign to SEL the right to file for own without restriction, patents, trademarks, trade names and copyrights with respect thereto for the territory of India. ................................................. 1.10."Product(s)" includes; 1.10.1 design and development of all models of rated capacity geared WTGs together with all related and pertinent component (hereof and therein required); 1.10.2 design and development of "Suzlon Flexislip 'System" together with all related and pertinent components thereof and therein required; 1.10.3 all and any Produces) that is developed ....
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....in and to any and all Product(s) for the purpose of manufacturing WTGs restricted to the Indian Territory only. The amount will be worked out on the basis of estimates of various cost parameters. In the event of any increase or decrease in the costs by 10%, the same shall be reviewed/revised as per the details of actual costs provided monthly by SEG, which shall be supported with proper justification. ................... 7. Rights in Respect of the Product(s) 7.1 SEG shall irrevocably and exclusively transfer all rights (including intellectual Property Rights), title or interest in and to any and all the Product(s) developed by SEG as far as they relate to the Indian territory, to SEL for the purpose of manufacturing WTGs restricted to the Indian Territory only, at the time of raising invoices for the price as agreed in Para 6 above. 7.2 SEL shall become the absolute owner of the Product(s) along with all rights (including Intellectual Property Rights), title or interest therein, at the time of transfer by SEG. SEL shall further have the right to license, sell and assign the rights (including Intellectual Property Rights), title or in....
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....service tax base and in context with the 'design services', the Tax Research Unit (TRU) in the Ministry of Finance, vide Budget Circular No. 334/1/2007-TRU dated 28.02.2007 has clarified as under: "6.7 Design services [section 65(105)(zzzzd)]: Services in relation to conceptualizing, outlining, creating the designs and preparing patterns for costumes, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings are leviable to service tax under fashion designing service [section 65(105)(zv)] and services in relation to planning, design or beautification of spaces is leviable to service tax under interior decorator's service [section 65(105)(q)]. Design services, other than the above specifically mentioned taxable services, like furniture design, aesthetic design, consumer or industrial products, logos, packaging, production of three dimensional models, etc. will be taxable under this category." 5.3 The incidence of levy of service tax is on the provision of a taxable service. In order to constitute a 'service', there must be involvement of three essential ingredients, i.e., a service provider, a service receiver and there....
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....ration, then such transaction would fall under the taxable category of 'design services', defined in the Act of 1994. On the contrary, in case of outright transfer of a design, which has already been created by the author, in favour of another person, then it would not be covered under the scope of the 'design services' and it would be categorized as a service under different head(s). To clarify such situation, we may take the same example as above, only by changing the stand of both the parties. Suppose, in terms of the agreement, 'B' creates a design, then the right in such design vests with him and, if he transfers the right in that design to 'A', then such transaction would not be categorized as a design service and should aptly be considered as the IPR services. 5.5 On perusal of case records, it reveals that the ownership of the alleged design vests with the group companies and what has been subsequently transferred to the appellants, is only the right in Indian territory in the said engineering drawing and design. This fact is evident from the confirmation letter dated 03.05.2011 of M/s. Suzlon Energy GmbH, Germany. The said letter is extracted herein below: 5.6 ....
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....ook, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force. As the phrase 'law for the time being in force' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. 9.2 A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs." 6.1 For confirmation of the adjudged demands on the appellants, the service tax department had issued the SCN dated 15.12.2011 for the period 06.06.2007 to 30.09.2011 and the SCN dated 20.04.2012 for the period from 01.10.2010 to 30.....
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.....2011, seeking recovery of alleged non-paid service tax amount for the period from 01.06.2007 to 30.09.2011. Since the SCN was issued beyond the normal period of one year from the relevant date, the department had issued the same by invoking the extended period of limitation, provided in the proviso appended to Section 73(1) of the Act of 1994. Now the question arises before the Tribunal for consideration is as to whether, the extended period of limitation can be invoked for issuance of the SCN, in the facts and in the circumstances involved in the case. 6.4 The terminology itemized in the proviso clause to Section 73(1) of the Act of 1994 have not been defined in the service tax statute and as such, to understand the true meaning and purport, we may refer to the meaning assigned in the dictionaries. The phrase 'fraud', according to Oxford Reference, is 'deliberate dishonesty to gain an unfair advantage, usually financial, through wrongful means, upon involving misrepresentation or deceit.' The Cambridge Dictionary has assigned the meaning of 'collusion' as 'agreement between people to act together secretly or illegally in order to deceit or cheat some one.' The phra....
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....provides limitation of six months. In cases, where the duty is not levied or paid or shortlevied or short-paid or erroneously refunded, it can be recovered by the appropriate officer within six months from the relevant date. (The expression `relevant date' is defined in the Section itself). But the said period of six months gets extended to five years where such non-levy, short levy, etc., is "by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules with intent to evade payment of duty......" 6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a ....
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.... law. Since, based on the books of accounts/documents maintained by the appellants, the audit was conducted by the department and the impugned proceedings were initiated, seeking recovery of the service tax demands, the same, if at all tenable, should be confined to the normal period and the extended period of limitation cannot be invoked, with the allegation that the appellants had suppressed the material facts from the department. 8.3 On importation of the technical know-how in the form of drawings & designs, the appellants had complied with the requirements under the customs statute and based on the import documents, which are the part of the present proceedings, the customs authorities had cleared the consignments for home consumption. Thus, it cannot be said that the jurisdictional Central Excise authorities were unaware about the modus operandi adopted by the appellants in importation of the technical know-how for use in the intended purpose. In view of the fact that both the appellants and the officers in the customs department had entertained the belief that the subject imports should be considered as goods, which was also endorsed by the Tribunal in the orde....
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....ally recorded the defense submissions made by the appellants, in support of their stand that importation of technical know-how from their group companies cannot be considered as a service, for payment of service tax under reverse charge mechanism. Therefore, we are of the considered view that the onus to prove the indulgence of the appellants into the fraudulent activities, having the intention to evade the government revenue, which lies with the department, has not at all been substantiated. Accordingly, the extended period of limitation cannot be invoked for confirmation of the adjudged demands on the appellants. Similarly, penalties imposed on the appellants under Section 78 of the Act of 1994 cannot also be sustained, in the absence of any evidence, being adduced by the adjudicator that the appellants had really indulged into the activities of fraud, collusion etc., or had contravened the statutory provisions, with the intent to evade payment of service tax. 9. In view of the foregoing discussions and analysis, we do not find any merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside ....