2025-VIL-2098-CESTAT-MUM-ST
  1. Home
  2. 2025-VIL-2098-CESTAT-MUM-ST

SERVICE TAX CESTAT Cases

Service Tax - Import of technical know-how, Design services, Permanent transfer of Intellectual Property Rights, Extended period of limitation - Appellant had entered into product development and purchase agreements with their group companies based in Germany and Netherlands for importing technical know-how, designs and drawings for manufacturing of wind turbine generators (WTGs) in India. The customs authorities had initially assessed the imported goods under the 'goods' category and allowed clearance at 'nil' rate of customs duty. Subsequently, the service tax department conducted an audit and issued show cause notices alleging that the imported technical know-how should be classified under the 'design services' category, making the appellants liable to pay service tax under Reverse Charge - Whether the activities undertaken by the appellants pursuant to the agreements with their group companies would fall within the scope and ambit of 'design services' as defined under the Finance Act, 1994 – HELD - The transactions in question cannot be categorized as 'design services'. The agreements clearly provided for a one-time transfer of intellectual property rights (IPRs), including technical know-how, designs and drawings, from the group companies to the appellants for manufacturing of WTGs in India. The appellants became the absolute owners of these IPRs for the Indian territory and had the right to further license, sell or assign them. Such permanent transfer of IPRs cannot be considered as a 'service' under the service tax law. Further, the IPRs transferred were not covered under any Indian law, and hence would not fall within the scope of 'IPR services' as per the statutory provisions. Therefore, the activities of the appellants do not fall under the taxable category of 'design services' - the impugned order is set aside and the appeals are allowed in favour of the appellants, both on the grounds of merits as well as limitation - Whether the department was justified in invoking the extended period of limitation for issuing the SCNs – HELD - The show cause notices were issued beyond the normal period of one year, by invoking the extended period of five years on the grounds of fraud, collusion, wilful misstatement or suppression of facts. However, there is no evidence to suggest that the appellants had deliberately attempted to evade payment of service tax. The appellants had reasonably believed that the imported technical know-how should be classified as 'goods' rather than 'services' - Further, the department had conducted the audit based on the records maintained by the appellants, and there was no indication that the appellants had suppressed any material information from the department. Therefore, the ingredients required for invoking the extended period of limitation were not satisfied, and the demands could only be confirmed within the normal period of one year.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GSTR-9 & GSTR-9C of FY24-25
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?