2026-VIL-853-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Payments towards for technology transfer, technical assistance under Inter-Governmental Agreement – Demand under Scientific and Technical Consultancy Service - Appellant, an aircraft manufacturer, entered into an agreement with a foreign state-owned entity for transfer of licence and technological documentation for production of aircraft in India under an Inter-Governmental Agreement - The appellant made payments for technology transfer, technical assistance, supply of parts, training and related services - Whether payments made by the appellant for services rendered by a foreign government organization in connection with technology transfer and technical assistance constitute "Scientific or Technical Consultancy Service" liable to service tax under RCM – HELD - The definition of Scientific or Technical Consultancy Service under Section 65 of the Finance Act, 1994 requires that the service must be rendered by a scientist, a technocrat, or a science or technology institution or organization. The foreign state entity in question is a governmental organization responsible for export of defence and dual use technology, acting as an exclusive state intermediary agency, and therefore cannot be classified as a science or technology institution or organization - The Tribunal relied on its earlier coordinate bench decisions involving the same appellant and the same foreign entity under identical factual matrices where it was conclusively established that the entity is a government organization and not a scientific or technical institution. Even the Department did not press this aspect when it filed an appeal before the Supreme Court against the coordinate bench's earlier order, thereby accepting the position. No evidence was placed on record to establish that the appellant received services from any individual scientist or technocrat in their individual capacity - The demand of Service Tax under Scientific or Technical Consultancy Service is set aside. However, confirmation of demand of Service Tax on MMR and penalty thereon is sustained - The appeals filed by assessee are allowed partly and the appeal filed by the Department is dismissed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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