The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed service tax demand and held that the technical assistance for manufacture of aircraft and engines is not IPR-Services.
The appellant was issued a Show Cause Notice dated 19.04.2013 seeking recovery of Service Tax for an amount of Rs.26,47,16,000/- for the Financial Year 2007-08 to 2011-12 under Section 73(1) of the Finance Act, 1994 along with interest, as leviable under Section 75 and imposition of penalty under Sections 76, 77 and 78 of the Finance Act.
The Advocate Rajen Mishra appearing for the appellant submitted that pursuant to an inter-governmental agreement between the Republic of India and the Russian Federation, the Russian Corporation viz. M/s. Rosoboron export, Moscow, Russia signed a Technology Transfer Agreement with the appellant for transfer of technical knowhow, personal instructions, training, rendering assistance for licensed production and setting up of overhaul facility with the appellant. The technology so received was made use of by the appellant and the Licence Fee thereto along with other incidental expenses were paid to the overseas enterprise.
It was pointed out that the technology shared by M/s. Rosboronexport is confidential in nature and qualified as undisclosed information which is specifically excluded from the meaning and definition of IPR and that the technology transferred by M/s. Rosboronexport is not registered under any law for the time being in force. To this extent, they also place reliance on C.B.E.C.’s Circular No. 80/2010/2004-S.T. dated 17.09.20042. Paragraph 9 of the said Circular for intellectual property.
A Two-Member Bench comprising Ashok Jindal, Judicial Member and Rajeev Tandon, Technical Member observed that “We thus feel that the transfer of technology by M/s. Rosboron export would not qualify as “intellectual property right” within the meaning of Section 65(55a) of the Act for the various aspects as listed in paragraph 3.1 of the Order and therefore, would not be covered under the definition of “intellectual property service” within the scope of Section 65(55b).”
“It is undisputed that the aforesaid activity of repairs and maintenance was carried out within the jurisdiction of India and therefore was liable for tax under Section 65(105)(zzg) as “management, maintenance or repair” service and was liable for payment of duty in terms of Rule 3(1)(ii) of the Export of Services Rules, 2005. The Commissioner vide the impugned order has categorically held that the provision of service having took place in India, there is a breach of Rule 6A of the Service Tax Rules, 1994 and Rule 3(1)(ii) of the Export of Services Rules, 2005. To this extent, we are fairly in agreement with the findings of the Commissioner on the aspect” the Tribunal noted.
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