2026-VIL-914-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Intellectual Property Services, Service Tax on Foreign Technology Transfer - Appellant entered into an International Technology Transfer Agreement with a foreign entity holding proprietary rights in technical knowledge for rotor blade manufacture. Under the agreement, the foreign entity provided drawings, technical information, and technical assistance of skilled personnel for a fee, while retaining copyright on documents and designs and granting the recipient exclusive rights to produce, sell and provide after-sales service in India - Whether the transfer of technical know-how, designs, and specifications from a foreign entity to an Indian entity constitutes "Intellectual Property Service" taxable under service tax on Reverse Charge basis when the technical know-how was not registered as an intellectual property right under Indian law – HELD - For a service to be taxable as intellectual property service under section 65(105)(zzr) read with section 65(55a) of the Finance Act, 1994, the intellectual property right must be "under any law for the time being in force", meaning it should be registered with trademark, patent or design authorities as recognized under Indian law. Since the technical know-how in the present case was admittedly not registered as an intellectual property right under any law in force in India, the Department failed to discharge its burden of proof that the activity was exigible to tax as intellectual property service – It is settled that registration with appropriate authorities is mandatory for taxation under the intellectual property service category, and absence of such registration means there exists no intellectual property right recognized under Indian law, thereby precluding service tax liability on reverse charge basis - The demand for service tax on intellectual property services is set aside - Scope of Consulting Engineering Services - Whether services rendered under a composite agreement involving collaborative development work, design, detailing, prototype-related activities and production start-up support constitute "Consulting Engineering Service" taxable under section 65(105)(g) of the Finance Act, 1994 – HELD – The Consulting Engineering service under section 65(105)(g) is limited to services rendered by a consulting engineer in relation to "advice, consultancy or technical assistance" in engineering disciplines, and does not extend to execution-oriented obligations or actual participation in the creation of deliverables. The definition employs the word "means", making it exhaustive and confining the levy only to services expressly enumerated therein – Applying the principle of noscitur a sociis, interpreting "technical assistance" by reference to the cognate terms "advice" and "consultancy", which require deliberation, conferring and rendering of opinion, but exclude actual performance of work - The contract could not be vivisected to isolate engineering skill embedded in performance and tax it as consulting engineering service. The erection, installation, commissioning and development work constitute execution of jobs and not consulting engineering service - The demand for service tax on consulting engineering services is set aside and the appeal is allowed in favour of the appellant.
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