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of <h1>Tribunal rules in favor of appellant in service tax dispute over foreign technical know-how</h1> <h3>Messrs Inductotherm Pvt. Ltd. Versus C.S.T. Service Tax - Ahmedabad</h3> The Tribunal allowed the appeal, ruling in favor of the appellant, M/s Inductotherm Pvt. Ltd., in a case concerning the demand of service tax, interest, ... Reverse charge mechanism - technical know-how obtained by the appellant form their foreign principal - appellant pointed out that Revenue has not shown if the said technical know-how is registered or patented in India. He argued that in absence of the said evidence demand cannot be confirmed - HELD THAT:- No evidence of any regulation in India of Technical know-how as IPR has been produced. Thus, the technical know-how cannot be treated as an IPR under any law for the time being in force. An identical issue has been decided in the case of M/S. SICPA INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, SILIGURI [2017 (9) TMI 1325 - CESTAT KOLKATA] where it was held that The legislature would have merely stated that an intellectual property right would mean any right to an intangible property. There would have been no need for it to qualify the same with a recognition under any law for the time being in force. Appeal allowed - decided in favor of appellant. Issues:Confirmation of demand of service tax, interest, and penalty on reverse charge basis for technical know-how obtained from foreign principal.Analysis:The appeal was filed against the demand of service tax, interest, and penalty by M/s Inductotherm Pvt. Ltd. regarding technical know-how obtained from their foreign principal. The appellant argued that the demand cannot be confirmed without evidence of the technical know-how being registered or patented in India, citing relevant cases such as Sicpa India Pvt. Ltd. vs CCE & ST Siliguri and Asea Brown Boveri Ltd. vs CCE & ST, LTU, Bangalore. The department relied on the impugned order, emphasizing the exclusive technical information granted under relevant Patents and the liability of service tax on services provided. The department also argued that the transfer of know-how was continual and not one-time, making the appellant liable for service tax. The appellant's claim for abatement for R & D Cess paid was refuted due to lack of disclosure of total royalty paid. The department contended that the demand was not time-barred despite services being received prior to the levy of tax but not registered with the department or taxed during the relevant period.The Tribunal referred to a previous case involving Reliance Industries Ltd. where the protection of intellectual property rights under Indian laws was discussed. It was highlighted that for a right to be categorized for service tax purposes under intellectual property rights (IPR), it should be registered with the trademark/patent authority. As there was no evidence of the technical know-how being regulated in India as IPR, the appeal was allowed based on the lack of recognition of the technical know-how as an IPR under any current law. The decision was in line with previous judgments emphasizing the need for registration of rights as IPR under applicable laws for tax liability on a reverse charge basis.In conclusion, the Tribunal allowed the appeal based on the lack of evidence of the technical know-how being regulated in India as an IPR, following the legal position established in previous cases. The judgment highlighted the necessity for registration of rights as IPR under existing laws for tax liability on a reverse charge basis.
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