AKASH OPTIFIBERS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Aksh Optifibers Ltd., are engaged in the manufacture of optical fibre cable and are engaged in research and development activities. They have developed e -governance and rural convergence concept titled as 'Gramdoot'. They have tested this gramdoot project and thereafter transferred technology to M/s. Aksh Broadband Ltd., under technological transfer agreement. According to Article 2.1 of the agreement, M/s. Aksh Optifiber Ltd., shall primarily assist ABL in setting up gramdoot project. In para 1.2.1 of agreement know -how is defined. Appendix I to the agreement required, AOL to enable to set up, operate and maintain a gramdoot kiosk on a commercial scale pursuant to this agreement. Article 3.1 of the agreement provides for the service and know -how provided by AOL pursuant to Article 2 and shall pay ABL the following consideration to AOL.

(2.) IT is argued for the applicant that they have transferred technical know -how and have not provided any service and therefore they are not liable for any service tax. According to applicant, Article 3.1 (a) provides that Rs. 1.50 crores were received for the gramdoot project technology transfer fee. Therefore, this does not include any service tax and accordingly no service tax is chargeable.

(3.) IT was argued on behalf of the Revenue that this amount of Rs. 1.50 crores is for the technology transfer as well as the service provided. Article 3.1 is for services and know -how provided in pursuant to Article 2. Article 3.7 of the agreement also makes it clear that besides technology transfer, ABL shall provide to AOL a detailed business cum implementation plan of kiosk to enable AOL to smoothly coordinate the implementation exercise as well as procurement and supply of required hardware. Since the applicant had not given separate break up for the technology transfer and the services provided as consulting engineer, therefore, the lower authorities, has correctly demanded service tax on the entire amount and the applicant may be directed to pre -deposit the full amount.