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TMI Blog2009 (1) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... Zydus Animal Health Ltd. (SZ for short) for permanent transfer of know-how at a consideration of Rs. 20 Crores and Rs. 28 Crores respectively. The Revenue took up investigation of these agreements which culminated in issue of show notice to the respondents requiring them to explain as to while (sic)(why) transfer should not be treated is (sic)(as) amounting to consulting engineer service and should not be levied to service tax. The original adjudicating authority came to the conclusion that the agreements between the parties amounted to providing consulting engineer services, and therefore the respondents were required to discharge service tax on the consideration received by them and further he also imposed penalties under various Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but requires further consultancy services to be provided. In relation to the second agreement, the agreement is valid for two years and thereafter it is optional to continue or not. The learned SDR also relied upon the decision of the tribunal in the case of Indian Farmers Fertiliser Co-operative Ltd. reported in 2007 (5) S.T.R. 281 (Tribunal-Delhi) in support of his argument that technical know-how transferable as such, is different from technical assistance provided for use of such know-how and in this case, the respondents have provided further assistance after the transfer of know-how. 2.2 On the other hand, the learned advocate on behalf of the respondents submits that both the agreements were for permanent transfer of know-how only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso submitted that the respondents case that transfer of know-how is not chargeable to service tax is vindicated by insertion of new category of services of "intellectual property service" with effect from 10th September, 2004. The learned advocate, also submitted that the contentions of the respondents, and submissions made by them is squarely covered by a catena of judicial pronouncements. He cited the following decisions:- (a) 2008 (11) S.T.R. 28 (Tribunal-Bangalore) - Mico Ltd. (b) 2008 (10) S.T.R. 297 (Tribunal-Delhi) - CST, Faridabad v. G.E.C. Avery Limited. (c) 2008 (9) S.T.R. 15 (Tribunal-Bangalore) - Matrix Lab. Ltd. (d) 2007 (7) S.T.R. 175 (Tribunal-Bangalore) - Maini Material Movement Pvt. Ltd. (e) 2007 (7) S.T.R. 214 (Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is barred by limitation. 3. We have considered the rival submissions in detail. The appeal filed by the Revenue, mainly relies on supplementary agreement dated 8 September, 1999 and Clause 7 of the shareholders agreement dated 29 January, 2000 in support of the contention that the agreements under consideration were not merely for the sale of technical know-how, but they have also provided consulting engineer service in the form of technical advice, consultancy, etc. There is no dispute that the respondents had sold the technical know-how required for the manufacture of various products involved in the agreements. The question to be decided is whether other two agreements have resulted in change of the nature of the transaction. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing engineering services. Further, the question also arises as to what the respondents should have done with the staff who are engaged in marketing and other activities, which were no longer required to be undertaken by them, consequent to the sale of technical know-how and their activity being limited only to the manufacture and transfer of goods to the purchasers. It is quite clear from the terms of the agreement and the details, after the transfer of know-how, the respondents took up only manufacturing activity, and the remaining activities were taken over by the purchasers of the technical know-how. It is also the submission of respondents that the purchasers of the technical know-how were not required to get all the goods manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X
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