P.G. Chacko, Judicial Member. - The Revisional Authority, in the impugned order, demanded service tax from the appellants, on a royalty amount of Rs. 1,84,346 paid by them to their German collaborators as consideration, according to the revenue, for technical know-how, industrial property rights and technical assistance. The above payment was made in terms of clause 3.2 of the Collaboration Agreement dated 20-5-1992 entered into between the appellants and the German company. The said provision obligated the appellants to pay to the German company a royalty at the rate of 5 per cent on the sale of a pesticide, viz., ‘Neemazal’ in the Indian domestic market and at the rate of 7 per cent on the sale of the same product in export market. The above provision of the agreement specifically provided that such payment by the appellants to the German company was in consideration of the grant of patent, trademarks, brand names and other rights and used to technical information and improvements as well as technical assistance. The lower authority seems to have banked on the expression ‘technical assistance’ used in clause 3.2 ibid. It has made an endeavour to develop the said aspect into the taxable service of "consulting engineer’s service". Hence, the demand of service tax, which is under challenge in the captioned appeals.

2. After hearing both sides and considering their submissions, we have found prima facie case against the above demand inasmuch as the ingredients of consulting engineer’s service defined under the Finance Act, 1994 have not been shown to have existed in the technical assistance aspect covered by the aforesaid agreement. That definition required the departmental authority concerned to show that technical assistance was rendered by a consulting engineer to the assessee in any discipline of engineering, so as to enable the revenue to demand service tax on the gross amount paid as consideration for such service. In the impugned order, there is no whisper as to whether the German company was acting in the capacity of consulting engineers and, if so, in what discipline of engineering. Further, we have also noticed that the amount of service tax demanded by the revisional authority is a levy on the entire amount of royalty paid by them to the German company as consideration for numerous benefits received from the German company. Technical assistance is only one of them. The impugned order is silent on the question as to what part of the royalty was paid for technical assistance. The order demands service tax on the entire amount.

3. In the result, there is prima facie case for the appellants and, accordingly, there will be waiver of pre-deposit and stay of recovery in respect of the amounts of service tax, interest and penalties.