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It explains that an assessee imported designs for wind turbine generator manufacturing (June 2007 to September 2010), initially classifying them as “paper” and claiming nil customs duty. The Revenue treated the activity as design services, but CESTAT held it was goods. The Supreme Court reversed CESTAT and held service tax applies on reverse charge. It relied on BSNL and the aspect theory, emphasizing contracts’ dominant nature.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/ey-tax-alert-sc-holds-import-of-customized-designs-and-drawings-on-paper-was-liable-to-service-tax/650533/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/ey-tax-alert-sc-holds-import-of-customized-designs-and-drawings-on-paper-was-liable-to-service-tax/650533.png","ImageObject",300,407,{"name":92,"@type":93},"mieayamfan","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-10-24",true,{"@type":102,"interactionType":103,"userInteractionCount":8},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What issue did the Supreme Court address in this tax alert?","Question",{"text":112,"@type":113},"Whether the import of customized engineering design and drawings on paper is liable to service tax under the category of “Design Services”. It examines the classification of such imported materials as goods or services.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"Why was service tax demanded by the Revenue?",{"text":117,"@type":113},"The Revenue argued that the import activity fell within “Design Services” under the Finance Act, 1994, and accordingly raised a demand for service tax on the value of the imported designs.",{"name":119,"@type":110,"acceptedAnswer":120},"What was the Supreme Court’s conclusion and legal basis?",{"text":121,"@type":113},"The Supreme Court held the assessee is liable to pay service tax on the import of “Design Services” under reverse charge. It relied on the BSNL judgment and the aspect theory, observing that the same activity can be taxed under different heads if the contract is indivisible and the dominant nature supports such classification.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},650533,1792831575,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":8,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":19,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":129,"read_time":52},962090893677,"https://ap-avatar.wpscdn.com/davatar_3d24733baf745e90a7e4bdd5f77d97b2","14 April 2023  \nEY tax alert  \nSC holds import of customized Designs and Drawings on paper was liable to service tax  \nEY Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your EY advisor.  \nExecutive summary  \nThis tax alert summarizes the recent ruling1 of the Supreme Court (SC) on whether the import of tailor-made engineering design and drawings on a paper would beleviable to service tax under the category of “Design Services”.  \nAssessee in the present case procured engineering design and drawings from its overseas sister concerns. While importing these designs during the period June 2007 to September 2010, assessee filed bill of entry classifying the same as\"paper\" and claimed benefit of “Nil” rate of customs duty.  \nRevenue raised demand of service tax contending that the said activity was covered under the category of “Design Services” as per the relevant provisions of the Finance Act, 1994.  \nCESTAT held that the said designs and drawings were goods and not services. The taxation of goods and services are mutually and explicitly conceived levies, and therefore, the same activity cannot be taxed as both.  \nDisposing the appeal filed by Revenue, SC held that assessee was liable to pay service tax on import of “Design Services” under reverse charge.  \nSC placed reliance on the BSNL2 judgment wherein, it was observed that there can be two different taxes/ levies under different heads by applying the aspect theory. As per the settled position of law, the same activity can be taxed as “goods” and“services” provided the contract is indivisible.  \nAccordingly, the impugned order passed by the CESTAT was quashed and set aside.  \n1 2023-TIOL-35-SC-ST  \n2 (2006) 3 SCC 1  \nBackground  \n􀁘 Assessee is inter-alia engaged in manufacturing of wind turbine generator (WTG). It entered into an agreement with its sister concern outside India for purchase of engineering design and drawings to be used exclusively for manufacture of WTG in India.  \n􀁘 While importing these designs during the period June 2007 to September 2010, assessee filed bill of entry classifying the same as \"paper\" and claimed benefit of“Nil” rate of customs duty3 .  \n􀁘 Revenue issued show cause notice raising demand of service tax on the value of \"Design Services\" imported by assessee. The said demand was subsequently confirmed vide order-in-original.  \n􀁘 Aggrieved, assessee filed an appeal before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) .  \n􀁘 CESTAT allowed the appeals and held that the impugned designs and drawings were goods and not services. It also observed that the taxation of goods and services are mutually and explicitly conceived levies, and therefore, the same activity cannot be taxed as goods and as services.  \n􀁘 Revenue preferred an appeal before the Supreme Court (SC).  \nRevenue’s contentions  \n􀁘 The contentions of assessee that any intellectual property put in a media at all times would only get classified as goods and never as services may not be the correct statement of law. Merely because an intellectual property is put in media, it would not per se make them goods.  \n􀁘 For example, importation of readymade drawings will constitute a sale of goods, whereas if a person engagesa painter to draw a picture of his choice and specifications, then the delivery of painting, eventhough on a canvas duly framed, may only constitute a service.  \n􀁘 In the case of BSNL4 , SC distinguished between sale of goods and a contract of service and observed that the test for deciding whether a contract falls into one category, or another is, what is the substance of the contract, otherwise called, the dominant nature test.  \nWhen a doctor writes a prescription or a lawyer draftsan opinion and delivers it to client, on payment of fees, consideration does not pass from the patient or client to","cbCaijSqsSTvkIfm","https://ap.wps.com/l/cbCaijSqsSTvkIfm","pdf",47960,"English","# Executive summary\n# Background\n# Revenue’s contentions\n# Assessee’s contentions\n# Supreme Court’s ruling","[{\"question\":\"What issue did the Supreme Court address in this tax alert?\",\"answer\":\"Whether the import of customized engineering design and drawings on paper is liable to service tax under the category of “Design Services”. It examines the classification of such imported materials as goods or services.\"},{\"question\":\"Why was service tax demanded by the Revenue?\",\"answer\":\"The Revenue argued that the import activity fell within “Design Services” under the Finance Act, 1994, and accordingly raised a demand for service tax on the value of the imported designs.\"},{\"question\":\"What was the Supreme Court’s conclusion and legal basis?\",\"answer\":\"The Supreme Court held the assessee is liable to pay service tax on the import of “Design Services” under reverse charge. It relied on the BSNL judgment and the aspect theory, observing that the same activity can be taxed under different heads if the contract is indivisible and the dominant nature supports such classification.\"}]","EY tax alert - SC holds import of customized Designs and Drawings on paper was liable to service tax | PDF"]