ST - Appellant is only a matriculate and does not hold any professional degree in Engineering, recognized by law - Therefore, appellant does not qualify as "Consulting Engineer" as defined in FA, 1994
Sh. Nagindas Jamnadas Vora obtained a patent bearing no. 187148 of 08/01/1998 for a new compact oil cooler which was allowed to be used by Vora Exclusive Tools Pvt. Ltd., for which he was entitled to receive royalty.
The department was of the view that the appellant is liable to pay service tax on the royalty received amounting to Rs.5,96,620/- during the year 2000-01 to 2001-02 along with interest thereon under “Consulting Engineer's Service”.
The adjudicating authority confirmed the demand along with interest and penalty and the lower appellate authority ‘mechanically confirmed' the demand and rejected the appeal without taking cognizance of the plea of the appellant that he was only a matriculate and was not a qualified engineer to come under “Consulting Engineer's Service”.
Before the CESTAT the appellant adverted to the definitions of ‘Consulting Engineer' given in clause 65(31) of the FA, 1994 and the definition of what constitutes Taxable service as per section 65(105)(g) of the FA, 1994. It was also pointed out that the transfer of right to use the patent falls under "Intellectual Property Service", which came under the tax net with effect 10/09/2004 and during the impugned period the said service was not taxable. Therefore, the impugned order is not sustainable in law and the appeal be allowed.
The Revenue representative chose not to budge from the stand taken by the lower authorities.
The Bench observed -
"6. We have considered the submissions made by both the sides. It is an undisputed fact that the appellant is only a matriculate and does not hold any professional degree in Engineering, recognized by law. Therefore, the appellant does not qualify as a “Consulting Engineer” as defined in law. Secondly, the appellant was a patentee and transferred the right to use the patent to his client for consideration of royalty payment. The said service merits classification under “Intellectual Property Service' which came into tax net with effect from 10/09/2004. Since the period in dispute is much prior to that, there is no service tax taxability with respect to the services rendered by him."
Holding that the order was not sustainable in law the same was set aside and the appeal was allowed.