2026-VIL-1341-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Consulting Engineering Services - Licensing of Pre-existing Intellectual Property versus Rendering of Services - Appellant entered into agreement with technology provider by which technology provider granted non-exclusive, non-divisible, non-transferable and non-assignable right to Appellant to use pre-existing Technology and Know-How for purpose of manufacturing and assembling passenger cars and components thereof in India and for use of trademark - Revenue proceeded on premise that services rendered by technology provider constitute Consulting Engineer Services and appellant as recipient of services from non-resident without office in India is liable to pay service tax under reverse charge mechanism w.e.f. period even though reverse charge provision was introduced only from 18.04.2006 - Whether services relating to technical assistance and supply of technical know-how rendered by technology provider under licensing agreement for use of pre-existing technology and trademark constitute taxable Consulting Engineering Services under Section 65 of Finance Act, 1994 - HELD - The agreement is a licensing arrangement not a consulting arrangement. The core object is grant of license by technology provider to Appellant enabling use of pre-existing technology, technical documentation, know-how and trademarks of technology provider - Consulting Engineering Services means services where consulting engineer is engaged and retained to provide engineering expertise for specific client needs and hallmark is rendering of professional skill and judgment by service provider at instance of client. Technology provider is neither a professionally qualified engineer nor an engineering firm but manufacturer of cars. There is not shred of evidence that technology provider was retained to provide any engineering advice, consultation or technical assistance or that it applied its engineering expertise to advise Appellant on specific engineering problem – The mere fact that subject matter of license belongs to domain of engineering does not transform transaction into consulting engineering service. Character of transaction must govern its classification. Correct legal characterisation is that of license or transfer of right to use intellectual property specifically pre-existing know-how and trademark as opposed to rendering of service - A transaction that involves the making available of existing intellectual property for use by the transferee, against consideration in the form of royalty or lump sum fees, is in the nature of a 'transfer of the right to use' or 'license', and not a service rendered by the transferor to the transferee. The services received by the appellant are not consulting engineering service - Further, for the period 2001-02 to 2003-04, RCM applicable only from 18.04.2006, the statutory provision enabling levy of service tax on recipient was not in force - The impugned Order-in-Original is set aside and the appeal is allowed
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