The Supreme Court of India held that engineering design and drawings are to be classified as design services for the purpose of service tax.
The case pertains to the issue of whether the import of “Engineering Design and Drawings” can be classified as “design services” and subjected to service tax. The respondent argued that the designs are goods and the amount paid to the foreign entity is nothing but the price for the sale of such goods. The Supreme Court relied on the definition of “design services” under the Finance Act, 1994, and held that the import of engineering designs and drawings falls under “design services” and is taxable under section 65(35b) read with Section 65(105) (zzzzd) of the Finance Act, 1994. The court also rejected the argument that service tax cannot be levied on the sale of goods and remanded the matter to the tribunal to decide other issues raised by the respondent.
COMMISSIONER OF CUSTOMS, CENTRAL
EXCISE & SERVICE TAX …APPELLANT
Versus
M/S SUZLON ENERGY LTD. …RESPONDENT decided by the Supreme Court of India on 10.04.23