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2016 (2) TMI 811 - BOMBAY HIGH COURT

2016 (2) TMI 811 - BOMBAY HIGH COURT - 2016 (41) S.T.R. 384 (Bom.) - Reverse change - the matter in issue was as to whether royalty paid/received as consideration for transfer of technology know how can form part of taxable value and whether the said issue would come within the province of rate of duty or to the value of the goods for the purpose of assessment as envisaged U/Sec. 35G is required to be considered. - Constitutional validity of sosecond proviso to Rule 6 and Rule 2(1)(d)(iv) of Ser .....

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gainst the assessee. - Writ Petition No. 3968 OF 2002 With First Appeal No. 589 of 2005 - Dated:- 24-6-2015 - V. GANGAPURWALA AND A. I. S. CHEEMA, JJ. For the Petitioner : Mrs. Kalpalata Patil Bharaswadkar, Advocate For the Respondent : Shri Arshad Hidaytullah, Senior Counsel i/by Mrs. Charuta S. Deshmukh, Advocate JUDGMENT PER S. V. GANGAPURWALA, J. :. Both these matters are concerning same subject matter and are between the same parties, as such are dealt together. 2. The petitioner in Writ Pe .....

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the said Act i. e. Sec. 68 of the Service Tax Act {Finance Act} (for short "Said Act"). This Court had admitted the writ petition by granting Rule on 29.10.2002. However, had refused the interim relief. As the interim relief was not granted, the proceedings pursuant to the said show cause notice impugned in the writ petition continued. The O.I.O. i. e. the office of the Commissioner of Central Excise and Customs, Service Tax Cell found the assessee i. e. M/s Bajaj Auto Limited liable t .....

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l No. 589 of 2005. 3. We have heard Mr. Hidaytullah, the learned senior counsel in First Appeal No. 589 of 2005 and Mr. Hidayatullah the learned senior counsel along with Mrs. C. S. Deshmukh, the learned counsel in Writ Petition No. 3968 of 2002 on behalf of assessee and Mrs. Kalpalata Patil Bharaswadkar, the learned counsel for the department. 4. The challenge to the show cause notice in Writ Petition No. 3968 of 2002 was based on various counts, so also validity of second proviso to Rule 6 and .....

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1999 and in the impugned show cause notice the service tax is claimed from 07.07.1997 to 31.03.2002 is concerned, the same can be considered while dealing with proceedings pursuant to the said show cause notice. In the light of that, the writ petition stands disposed of. 5. As far as First Appeal No. 589 of 2005 is concerned, the same assails the judgment of CESTAT. The appeal is filed under the provisions of Sec. 35G of the Central Excise Act as amended by the Finance Act 2003. 6. Mr. Hidaytull .....

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eptible to the service tax. Even the CESTAT has held that royalty is not subject matter of service tax. Right to use trade mark is a transaction in property and not in consultancy or advice and that no consultancy or advice is involved. It is a transaction of intangible property, so also technical assistance does not come within the ambit and purview of service tax. The dispute come within the purview of rate of tax. The learned senior counsel relies on the judgment of the Division Bench of Kerl .....

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terlite Optical Technologies Ltd. Vs. Commissioner of Central Excise Aurangabad reported in 2007 (213) E.L.T. 658 (Bom). 7. Mrs. Kalpalata Patil Bharaswadkar, the learned counsel for the department strenuously contends that the appeal will have to be decided on merits as it is admitted. According to the learned counsel, if the S.L.P. is dismissed in limine or is withdrawn, the principle of merger does not apply. For the said purpose the learned counsel relies on the judgment of the Apex Court in .....

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half of KHI and now cannot resile from the same. As per Sec. 65 of the Finance Act, tangible services in respect of consulting engineering means any service provided by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering. As per Rule 6 of Service Tax Rules, more particularly it's second proviso, the assessee is liable. According to the learned counsel, the appeal is perfectly maintainable before this Court U .....

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Apex Court in a case of Union of India and another Vs. Guwahati Carbon Ltd. reported in 2012 CJ (SC) 1491 and contends that the appeal U/Sec. 35G of the said Act shall lie to the High Court from the order passed in any appeal by the Appellate Tribunal. If the order of the Tribunal does not relate among other things to the determination of any question having relation to the rate of duty or to the value of goods, the dispute with regard to the assessable value is always maintainable before this .....

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aintainability of appeal. 9. Before adverting to the contentions raised by the learned counsel for respective parties, it would be appropriate to refer to the relevant provisions of the Central Excise Act, 1944 i. e. Sec. 35G as it stood then and Sec. 35L as under : THE CENTRAL EXCISE ACT, 1944 1. .......... 35. Appeals to [Commissioner (Appeals)]. 35A .............. 35G. Appeal to High Court( 1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on .....

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hall be ( a) file within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that q .....

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e the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which ( a) has not been determined by the Appellate Tribunal; (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in subsection (1). (7) When an appeal has been filed before the High Court, it shall be heard by a ben .....

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first heard it. (9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.] "35L. Appeal to Supreme Court.[( 1)] An appeal shall lie to the Supreme Court from [( a) any judgment of the High Court delivered ( i) in an appeal made under section 35G; or (ii) on a reference made under section 35G by the Appellate Tribunal before the 1s .....

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ty of excise or to the value of goods for purposes of assessment. [(2) For the purpose of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment]" 10. This Court had framed the following substantial questions of law while admitting the appeal. (1) Whether royalty paid/received as consideration for transfer of technology know how can form part of taxable value ? .....

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e said issue would come within the province of rate of duty or to the value of the goods for the purpose of assessment as envisaged U/Sec. 35G is required to be considered. 12. The CESTAT in the judgment impugned in the present appeal has held that right to use trade mark is a transaction in property and not consultancy or advice. It is a transaction of intangible property and in the present case, as per agreement the assessee has right to use trade marks/trade name of KHI as per article 7 of th .....

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he said judgment was assailed by the Department before the Apex Court. The Department withdrew the said appeal. No doubt, if S. L. P. is summarily dismissed, the theory of merger does not apply. There cannot be any dispute with the said proposition. However, it is not a case of dismissal of S.L.P., but it is a case of withdrawal of appeal with liberty to file appropriate appeal. The said judgment stands confirmed. 13. Even in a case of Sterlite Optical Technologies Ltd. Vs. Commissioner of Centr .....

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