TMI Blog2008 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 passed by the ACCE, Muvattupuzha Division confirming Service Tax on "Intellectual Property Service" along with interest and penalty. 2. The assessees are holders of Service Tax registration under the category of 'Consulting Engineer Services'. They had entered into an agreement for a period of 10 years with M/s. E.H. Scharack Components AG, a foreign consultant on 9-3-1998 for transfer of technical know-how or patent and other connected services. They agreed to pay royalty of 5 per cent of the value addition of each product made and sold by OEN using know-how or patent of Scharack licensed under the agreement. The authorities took the view that technical know-how is an intangible property covered under the ambit of the definition of Intellectual Property Right in Clause (55a) of section 65 of the Finance Act and therefore, the provision of technical know-how is a taxable service under the category of "Intellectual Property Service' with effect from 10-9-2004, which includes transferring, whether permanently or otherwise any intellectual property right. In view of this understanding, the royalty paid by the assessee on various days were brought within the purview of Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is levied on the services provided under section 66 of the Act by a service provider. Rule 6(1) of the Service Tax Rules, 1994 provides that the said tax is on the value of the taxable services received, which is to be paid to the credit of the Central Government by the 25th of the month. The proviso to this rule prescribes that in case of a person, who is non-resident or is from outside India and who does not have any office in India, and if such a person is liable to pay service tax, the said tax shall be paid by such person or on his behalf by any other person authorized by him. In the present case, from the agreement of transfer of technology and know-how, it is apparent and if its services covered then the appellants herein are the recipient of such services, which are provided by Ciba Geigy Ltd., Switzerland or their authorized representatives in India. They were required to discharge that obligation and liability. The appellants cannot be fast and with the said tax liability since they are being authorized representative of Ciba Geigy Ltd., Switzerland, is not forthcoming from the records. Therefore, the Commissioner (Appeals) upholding the order dated 27-8-2003 asking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voked. 9. Since no tax liability on the appellants, there can be no interest liability determined on them. 10. The appellants are not required to discharge any service as consulting engineers under the provisions of the Service Tax Law and/or required to file declaration or have any application for discharge of liability to duty. They are, therefore, not liable for any penalty in terms of section 76. 11. In view of the findings, the order is required to be set aside and appeal allowed." (p. 414) 5.1 Likewise the Tribunal m the case of Bajaj Auto Ltd. (supra) after examining the articles of agreement in a similar situation also allowed the appeal by following the ruling rendered by them in earlier order Aviat Chemicals (P) Ltd. v. CCE 2004 (170) ELT 466/ [2007] 6 STT 510 (Delhi-CESTAT). The findings recorded in Paras 4 - 9 as reproduced herein below: "4. The submission of BAL is that these articles provide for deduction of income-tax at source and remitted the balance to KHT in view of the fact that the requirement to issue a certificate for deduction of tax at source, is applicable under the Income-tax Act, 1961 and there is no provision for payment of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice in India and is liable to pay service tax on taxable services provided in India. (1) the service tax thereon shall be paid by such person or on his behalf by any other person authorised by him, who shall submit to the Commissioner of Central Excise in whose jurisdiction the taxable services have been rendered, a return, containing the following details: (a) name and address; (b) name and address of the client to whom the taxable services were rendered; (c) nature of taxable services rendered; (d) period for which taxable services were rendered: (e) value of the taxable services rendered; (f) service tax liability on the taxable services rendered, along with a copy of the bill raised on the client to whom services have been rendered, a copy of the contract or agreement regarding the provision of such services to the client, and a demand draft payable to the Commissioner of Central Excise towards his service tax liability'. The proviso clearly envisages existence of 3 persons,— (1) service provider; (2) service receiver; (3) representative/client of service provider. 7. In the present case BAL is the Service Receiver. In other words, BAL is the client o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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