The CESTAT set aside a service tax demand of Rs. 2.31 crore concerning a technology licensing agreement with Skoda, determining it did not qualify as consulting engineer service.
CESTAT Sets Aside Rs. 2.31 Crore Service Tax Demand on Skoda Licence
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand of Rs. 2.31 crore concerning a technology and know-how licensing agreement with Skoda. The Tribunal concluded that licensing pre-existing automotive technology and intellectual property did not amount to consulting engineer service, and thus should not attract service tax.
This decision rests on the premise that the nature of the transaction does not align with the statutory definition of consulting services as outlined in the Finance Act. The Tribunal underscored that the essence of licensing intellectual property is fundamentally distinct from that of providing engineering consulting services.
Legal practitioners should be aware that this ruling establishes a clear demarcation between license-related services and consulting services for tax purposes. This clarification will assist in structuring future agreements involving technology transfer and licensing agreements, ensuring compliance with service tax laws and minimizing exposure to liability.
Citations
- Skoda Auto India Pvt. Ltd. v. CCE (2026) CESTAT
