Page 158 - GSTL_2nd July 2020 _Vol 38_Part 1

76 GST LAW TIMES [ Vol. 38
2. Mr. Indranil Banerjee, CA appearing for the appellants submits that
the agreement was between the two Governments and the ultimate supplies of
the aircraft was to the Ministry of Defense only and no commercial activity is
involved in the entire act. He also submits that the issue of payment of technical
know-how, etc to the foreign entities by the appellants to various overseas trans-
ferors of technology was under litigation at their Nashik in Maharashtra and
Rolls Royce Turbomeca Limited in U.K. He submits that in respect of their unit in
U.K, the demand was raised in respect of the agreement with Russia Govern-
ment for the manufacture of unit 30 aircrafts under the heading “Consulting En-
gineer Services”. The issue travelled to the Allahabad Bench of the Tribunal who
have held that payments made by the appellant-company was for transfer of
technology under Inter-Governmental Agreement and not for receipt of any ser-
vices in India in relation to business or agreement and such payments were not
chargeable under the heading ‘Consulting Engineer Services’ or reverse charge
basis. Learned Counsel for the appellant submits that in respect of their Nashik
unit for the same contract in the said Sukoyi, demand was raised under ‘Scien-
tific and Technical Consultancy Services’. Mumbai Bench of this Tribunal relying
on their earlier case in respect of the appellants’ themselves - 2015 (40) S.T.R. 289
(Tri. - Mum.) have held that the services received by the appellants do not come
under the purview of ‘Scientific and technical Consultancy Services’. Learned
Counsel further submits that Board of Excise and Customs vide Circular
80/2004-S.T., dated 17-9-2004 have categorically clarified it from para No. 9.1 as
follows :
“Intellectual property emerges from 9.1 application of intellect, which may
be in the form of an invention, design, product, process, technology, book,
goodwill etc. In India, legislations are made in respect of certain Intellectual
Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and de-
signs. The definition of taxable service includes only such IPRs (except cop-
yright) that are prescribed under law for the time being in force. As the
phrase ‘law for the time being in force’ implies such laws as are applicable
in India, IPRs covered under Indian law in force at present alone are
chargeable to service tax and IPRs like integrated circuits or undisclosed in-
formation (not covered by Indian law) would not be covered under taxable
services.”
3. Learned AR for the Department submits that it is not a contract be-
tween the two Governments as submitted by the appellant but a contract be-
tween a PSU and a foreign entity under the general agreement reached between
the Government of U.K. and Government of India. He further submits that on
going through the terms of the agreement, it is categorically held at para 24.4 of
the contract that there is a patents, designs and copyrights to the extent that was
required in the manufacture of aircrafts. He further reiterates the findings of the
Order-in-Original.
4. Heard both sides and perused the records of the case. On going
through the issue involved, the following emerges :
Appellants received similar services by virtue of Inter-governmental
agreements in the manufacture of Sukoyi aircraft at different locations in the
country. The Department has viewed the services received in a different manner
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