In Brief
Suzlon Energy imported engineering design and drawings for wind turbine manufacturing from its foreign subsidiary, classifying them as 'paper goods' with nil customs duty. The tax authority demanded service tax of Rs 18.42 crores, claiming the designs were taxable 'design services'. CESTAT rejected this, holding designs cannot be both goods and services. The Supreme Court held that an activity can be taxed as both goods and services when the contract is indivisible. The Court quashed CESTAT's decision, ruling the designs are taxable as design services under Finance Act 1994. However, the Court remitted two grounds to CESTAT: whether foreign entity services qualify as 'design services' and validity of the extended limitation period. The appeals were partly allowed in favour of Revenue on the main issue while remitting subsidiary questions."
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