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Consulting engineering services
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| admin |
Posted on 23-07-2006 01:03
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Super Administrator
Posts: 129
Joined: 01.05.06
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Royalty paid for transfer of technology (technical know how) is not liable for service tax under the category of 'consulting engineering services'. (This principles is also upheld in Turbo Energy Ltd. vs. CCE, Chennai-III (2005) - TIOL - 48 - CESTAT -Mad.)
CCE Chennai-III vs. Veleo Friction Material India Pvt. Ltd. (2005) 185 ELT 78 (Tri-Chennai) |
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| admin |
Posted on 23-07-2006 01:11
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Super Administrator
Posts: 129
Joined: 01.05.06
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Ishikawajima-Harima Heavy Ind. Co. Ltd (2005) [182 ELT 281 (Commr. Appl.)]
In this case, Petronet LNG Ltd. had entered into an agreement / contract with a consortium of which the appellant was a member, for providing engineering, procurement, construction and commissioning of a plant at Dahej on turnkey basis on a fixed lumpsum price. The appellants for their part were required to provide all design and detail engineering, project management and supervision and residual and detailed Engineering. However, in terms of the contract at both levels viz. at the level of consortium vis-à-vis, the entire facility and the level of each individual member's scope of work as part of the entire scope of work for the facility, the obligation continued to remain on a turnkey basis. Following Daelim (2003) 153 ELT 457 and other cases it was held that the appellants as a consortium member was not liable for service tax as consulting engineer.
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| admin |
Posted on 23-07-2006 01:16
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Super Administrator
Posts: 129
Joined: 01.05.06
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ARACO Corporation vs. CCE, Bangalore (2005) 180 ELT 91 (Tri-Bang.)
In this case the appellants based in Japan transferred technical know-how to their Indian counterpart during the period November, 1998 to December, 2000. The department sought to tax the service under consulting engineer on the sole ground that by virtue of Notification dated 18/2002 dated 16-12-2002 technical know-how would fall under consulting engineering category. The Tribunal, granting stay, held that the Notification can only have a prospective effect and cannot be said to have effect during the period in question.
Edited by admin on 23-07-2006 01:16 |
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| admin |
Posted on 23-07-2006 01:17
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Super Administrator
Posts: 129
Joined: 01.05.06
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Re : Thyssen Krupp JBM Pvt. Ltd. 2005 (180) ELT 285 (Commr. Appl.)
In this case, the appellants, a joint venture company paid certain amounts to M/s. KCL, a joint venture partner, for providing product engineering services (including training of personnel in England). The Commissioner (Appeals) held that the services are not liable for service tax after taking cognizance of the following submissions of the assessee -
There is no hiring of services of a consulting engineer on account of the fact that the Joint venture partner continued to hold the property and copyright over the drawing, designs, etc. and the appellants had no right over them.
All the services were rendered beyond the territorial jurisdiction of India. The services were rendered in England where M/s. KCL is located. No tangible or intangible service had been rendered in India. Even the design of the product was not received by the appellant. In terms of section 64 the levy of service tax as imposed in the Finance Act, 1994 extends to the whole of India except the State of Jammu and Kashmir. Therefore any service rendered beyond the territorial jurisdiction of India is not amenable to service tax. This has been made clear by the Board while clarifying the services rendered by Market research agency.
During the period under dispute, the person liable to pay tax in respect of services provided by non-residents or persons from outside India was such person or his authorized representative. There being no specific authorization by M/s. KCL to the appellants to pay service tax on their behalf the appellants could not be fastened with the tax liability.
Prior to the amendment in rule 2(l)(d) w.e.f. 16-8-2002 making the recipient liable for payment of service tax in respect of services provided by non-residents or persons from outside India, the recipient of services cannot be made liable. |
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| admin |
Posted on 23-07-2006 01:24
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Super Administrator
Posts: 129
Joined: 01.05.06
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Atlanta vs. CCE - 2005 (179) ELT 455 (Tri-Chennai)
Where the appellant, a civil engineer, rendered technical advice to his customers as to the suitability of the letter's land for building construction and for this purpose paid soil test fees for geologists and recovered it from his customers as part of the fee for technical advice, the Tribunal held that the advice is based on the soil test results and soil test fees should be treated as an integral part of the consideration collected for technical advice and cannot be excluded while computing the amount to be taxed. The Tribunal also held that amounts collected towards cost of construction of any building cannot be brought within the purview of "advice, consultancy or technical assistance". |
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| admin |
Posted on 23-07-2006 01:25
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Super Administrator
Posts: 129
Joined: 01.05.06
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Bajaj Auto Ltd vs. CCE (2005) 179 ELT 481 (Tri-Chennai)
In this case the appellants paid an amount of royalty for technical know how, technical assistance and patents for manufacture of two wheeled motor cycles to M/s Kawasaki Heavy Industries, Japan. The lower authorities sought to tax the appellants in respect of the amounts paid by them under the category of consulting engineering services. Following the case of Navinon Ltd v/s CCE.172 ELT 400(T), the Tribunal quashed the demand, set aside the penalties and inter alia held as follows:
There being no provision like in the Income-tax Act, 1961 to deduct the tax at source in case of service tax and in absence of such provisions the appellants were not required to deduct service tax and pay it to the Government. Accordingly, no liability for payment of service tax could be fastened on the appellants.
During the period under dispute, the person liable to pay tax in respect of services provided by non-residents or persons from outside India was such person or his authorized representative / agent. The appellants were clients of Kawasaki Heavy Industries, Japan and not their authorised representatives / agents and hence could not be fastened with the tax liability.
Prior to the amendment in rule 2(l)(d) making the recipient liable for payment of service tax in respect of services provided by nonresidents or persons from outside India, the recipient of services cannot be made liable.
The payment of royalty is not subject to service tax since no consultancy or advice is involved in a transaction of lease or sale of trademark. [Mat Chemicals vs. CCE 2004 (170) ELT 466 (T) followed].
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| admin |
Posted on 23-07-2006 01:29
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Super Administrator
Posts: 129
Joined: 01.05.06
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Larsen & Toubro Ltd. vs. CCE, Cochin - 2004 (174) ELT 322 (Tri.-Del)
Following the Daelim's case (2003) 155 ELT 457 (Tribunal) wherein it was held that a works contract cannot be vivisected and part of it subjected to service tax, the Tribunal held that design element of works contract cannot be separated and be subjected to service tax under the category of Consulting Engineers services. The Department's plea that CBEC Circular No. 49/11/2002 - ST dated 18-12-2002 was not considered by the Tribunal in Daelim Industrial Company's case was not considered by the Hon'ble members. |
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| premjaiswal |
Posted on 05-07-2007 17:37
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Member
Posts: 1
Joined: 05.07.07
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for the post of design & devlopment |
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