Copyright exemption for logo royalties prevails where the mark is an artistic work, not taxable intellectual property service.

Royalty for permitting use of the 'TTK' logo, registered as an artistic work under the Copyright Act, 1957, was treated as consideration for temporary transfer or permitted use of copyright and not as taxable intellectual property right service. The exemption in Notification No. 25/2012-ST, as amended, was applied because the Finance Act, 1994 definition of intellectual property right excludes copyright. The logo was characterised as a copyright-protected house mark rather than a trade mark or other taxable intellectual property right, so the service tax demand was held not sustainable.

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Issues: Whether royalty received for permitting use of the 'TTK' logo, registered as an artistic work under the Copyright Act, 1957, was liable to service tax under intellectual property right service, or was exempt as temporary transfer or permitting use of a copyright.

Analysis: The exemption entry in Notification No. 25/2012-ST, as amended by Notification No. 03/2013-ST, covers services by way of temporary transfer or permitting the use or enjoyment of a copyright relating to original literary, dramatic, musical or artistic works. The logo was found to be registered under the Copyright Act, 1957 as an artistic work, and the definition of intellectual property right under the Finance Act, 1994 excludes copyright. The distinction between a house mark and a trade mark was applied, and the logo was treated as a copyright-protected house mark rather than a taxable intellectual property right. The issue was also treated as covered by the assessee's own earlier decision on the same point.

Conclusion: The demand of service tax on royalty for use of the 'TTK' logo was not sustainable, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where the subject matter is a copyright-protected artistic work and not a trade mark or other taxable intellectual property right, permitting its use falls within the copyright exemption and is outside the taxable intellectual property service entry.

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