Technical assistance and technical know-how received by an Indian company from a foreign company for period November, 1998 to December, 2000 is neither taxable u/s 65(31) nor u/s 66A of the Finance Act, 1994

JUDGEMENT

Revenue has come up in this appeal challenging the order passed by CESTAT order-in-appeal Final Order No.1061 to 1063/06 dated ID.6.2006.

2. Being aggrieved by the order of the Asst. Commissioner of Central Excise, respondent- assessee had preferred an appeal before the Commissioner of Central Excise (Appeals), Bangalore contending that it is not liable to pay service tax in respect of the service rendered by the assessee (Foreign Company) to an Indian Company on the ground that Service Tax Act was not applicable for the relevant period. Disputed period is between November, 1998 and December, 2000. The contention of the assessee was rejected by the Commissioner of Central Excise (Appeals), Bangalore, against which assesses filed an appeal before the CESTAT, Bangalore. Along with the respondent-assessee two more companies had also preferred appeals viz., M/s Bharat Electronics Ltd. and M/s SKF India Ltd.. The tribunal, by a common order, held that the services rendered by the assessee does not attract the service tax by relying upon the judgments relied upon by the assessee. Being aggrieved by the same, revenue has come up in this appeal raising the following substantial question of law:

“Whether, during the relevant period, in view of Board’s Circular dated 2.7.1997 the technical assistance and technical know-how received by the Respondent from a foreign company did not constitute taxable service, viz., Consulting Engineer Services?”

3. Counsel for the revenue contends that the tribunal has committed a serious error in not considering the fact that the assessee being a foreign company has rendered the services to an Indian Company and service rendered to an Indian Company is liable to pay service tax. To substantiate his case, he relied upon the provisions of sub-section(31) of Sec.65 of the Service Tax Act, contends that the respondent-assessee as a consultant engineer has rendered professional technical know-how is liable to be taxed under the Service Tax Act. Therefore, he contends that the tribunal has committed a serious error in not considering the provisions of subsection (31) of Sec.65 of the Service Tax Act. Per contra, Mr. Ravishankar contends that subsection (31) of Sec. 65 only deals with the definition of the word “Consulting Engineer’. Sub-section(31) reads as here under:

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