Intellectual property service tax applies only to rights recognised under Indian law; technical know-how payments fell outside the levy.

Taxability under intellectual property service depends on the underlying right being an intellectual property right recognised under Indian law for the time being in force. A foreign collaboration agreement for transfer of technical know-how, technical information and royalty did not show a registered or otherwise recognised Indian intellectual property right, and the Tribunal followed its earlier view that mere technical know-how or a foreign patent position is insufficient. The payments under the agreement were therefore not taxable as intellectual property service, and the demand could not be sustained.

---

---

Issues: Whether the know-how, technical information and royalty payments under the foreign collaboration agreement were taxable as an intellectual property service under the Finance Act, 1994.

Analysis: The dispute turned on the scope of intellectual property right service under the Finance Act, 1994. The relevant statutory definition required the right to be one recognised under a law for the time being in force. The agreement involved transfer of technical know-how and related information from a foreign collaborator, but the record did not show a right registered or otherwise recognised as an intellectual property right under Indian law. The Tribunal followed its earlier decisions holding that mere technical know-how or a foreign patent position, without recognition under Indian law, does not fall within the taxable category of intellectual property service.

Conclusion: The amounts paid under the agreement were not taxable as intellectual property service, and the demand could not be sustained.

Ratio Decidendi: For levy of service tax under intellectual property service, the underlying right must be an intellectual property right recognised under Indian law for the time being in force.

---