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Tribunal Overturns Service Tax on Royalty Payments for IPR Services, Citing Consistent Precedents in Favor of Appellant. The CESTAT Chennai allowed the appeals, setting aside the orders of the lower authorities that demanded Service Tax on royalty payments made under a ...
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Tribunal Overturns Service Tax on Royalty Payments for IPR Services, Citing Consistent Precedents in Favor of Appellant.
The CESTAT Chennai allowed the appeals, setting aside the orders of the lower authorities that demanded Service Tax on royalty payments made under a 'Licence and Royalty Agreement' for IPR services. The tribunal found that previous CESTAT decisions consistently held that such royalty payments were not subject to tax in India. Consequently, the demands by the Revenue were deemed improper, and the appellant was granted consequential benefits, if any, as per law.
Issues involved: The issue involved in this case is whether the Revenue is justified in demanding Service Tax on the royalty paid to M/s. CCI.
Comprehensive details of the judgment:
1. The undisputed facts reveal that the appellant is involved in the process of separation, isolation, storage, and cryo-preservation of Umbilical Cord and Stem Cells under a 'Licence and Royalty Agreement' with M/s. Cryo-Cell International Inc., USA, where the appellant pays royalty to M/s. CCI as per the agreement.
2. The Show Cause Notices were issued to the appellant for not registering under Intellectual Property Rights (IPR) service and not paying Service Tax on the royalty payments made to M/s. CCI. The Adjudicating Authority confirmed the demands made in the Show Cause Notices.
3. The appellant appealed to the Commissioner of Central Excise (Appeals) who upheld the demands, leading to the present appeals before the CESTAT Chennai.
4. The appellant argued that previous cases decided by the Chennai Bench of the CESTAT had settled the issue in favor of the appellant, citing specific cases where similar disputes were resolved in favor of the appellant.
5. The Revenue representative relied on the findings of the lower authorities.
6. After hearing both sides and examining the documents, the CESTAT found that previous decisions by the CESTAT Benches consistently held that the payment of royalty for IPR services was not liable to tax in India. Therefore, the demands raised by the Revenue were deemed improper, and the impugned orders were set aside.
7. The appeals were allowed with consequential benefits, if any, as per law.
Separate Judgement: None.
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