Title: Commissioner of Customs, Central Excise & Service Tax v M/S Suzlon Energy / Citation : 202LiveLaw (SC) 298

👉 Suzlon Energy Ltd. (“Respondent”) is a manufacturer of Wind Turbine Generators (WTG). The Respondent entered into ‘product development and purchase agreement’ with M/s Suzlon Energy GmbH (“M/s SEG”), which is its sister concern situated in Germany, to be used exclusively for manufacturing of WTG in the territory of India.

👉 M/s SEG reduced the designs to a blue print on paper and exported the same to India. While importing the designs, the Respondent filed Bill of Entry with the Custom authorities and classified the same as “Paper” and claimed benefit of ‘Nil’ rate of customs duty.

👉 The Respondent claimed that since the designs and drawings received by it via customs route by filing the Bill of Entry were “goods” and not “services”, it was not required to pay the service tax.

Court’s Sequitur:
👉 “Engineering Design & Drawings” imported from sister companies are classified as “design services” and are amenable to service tax

👉 The Bench observed that the Respondent engaged its German sister concern for preparation of “Engineering Design & Drawings” to be used in manufacturing of WTG. The design was reduced as blue print on paper and delivered to the Respondent on the same medium.

👉 It was held that such “designs” were subjected to the service tax even as per the clarification by the Board dated 18.03.2011 on the issue of applicability of indirect taxes on packaged software. Therefore, the Respondent was liable to pay service tax on the “design services” received from abroad under reverse charge.

👉 Further, M/s SEG is a subsidiary of the Respondent. Accordingly, the amount received by M/s SEG from the Respondent for its service in preparing the “Engineering design & drawings” was liable to service tax under reverse charge, in terms of the concept of ‘associated enterprise’.