https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=772482 https://www.taxtmi.com/caselaws?id=772482 Levy of service tax - royalty amount received for granting a license to use trademarks under a novation agreement dated 24.02.2010 - refund of the amount of service tax paid after executing the novation agreement - sale or deemed sale. Whether the service tax was leviable on amount of royalty received by M/s. BCCL for grant of license in favour of M/s. BCL to use the trademark or not? - HELD THAT:- The transfer of property in goods is sale. In addition, the transactions where there may not be a conventional transfer of property in goods but a transfer of right to use the goods also got included to be called as sale of goods/the 'Deemed Sale'. It is also observed that the term "transfer of right to use goods", as got coined with the said 46th Amendment, is not defined in the Constitution nor it is defined in any other statute. The said phrase for the first time got interpreted by Hon'ble Supreme Court of India in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India [2006 (3) TMI 1 - SUPREME COURT] wherein the Hon'ble Apex Court enunciated following five attributes for a transaction to constitute a "transfer of right to use the goods". The 'Intellectual Property Rights' are held equivalent to goods. Support drawn from the decision of this Tribunal in the case of Commissioner of Service Tax, Delhi-II Vs. Future Brands [2022 (9) TMI 436 - CESTAT NEW DELHI], wherein it was held that the exclusive license to use the trademark would qualify as "transfer of right to use the goods" and would be covered by article 366 (29A) (d) of the Constitute of India. It is not inclined to accept the contention of the department that the transaction does not amount to permanent transfer of goods hence will amount to rendering of service. It is rather held that the impugned transaction arising out of novation agreement dated 24.02.2010, the parties to the said agreement agreed to enter into the transaction of 'Deemed Sale' as different from it being called as declared service as the transferee M/s. BCL was allowed to use IPR/goods to the exclusion of the transferor i.e. M/s. BCCL. The service tax was not leviable on amount of royalty received by the appellants M/s. BCCL. The demand is held to have been wrongly confirmed qua the appellant. This issue stands decided in favour of the appellants. Whether the appellant is entitled for the refund of the amount of service tax paid after executing the novation agreement dated 24.02.2010? - HELD THAT:- The appellant was restrained to use the said trademark during the said period in any territory of the world and as such the transaction was a transaction of 'Deemed Sale' inviting no service tax liability. Hence, the amount paid by the appellant for which refund has been claimed was the amount not towards the duty but was an amount wrongly deposited by the appellant. It is also observed that the Commissioner (Appeals) has upheld the rejection of refund announced by the original adjudicating authority on the ground of unjust enrichment. Apparently and admittedly, the appellant had collected service tax for the relevant period. There is no evidence produced on record to show the reversal of the said amount. Hence, there are no infirmity when the doctrine of unjust enrichment has been invoked for rejecting the said refund claim. Apparently and admittedly, the appellant had collected service tax for the relevant period. There is no evidence produced on record to show the reversal of the said amount. Hence, there are no infirmity when the doctrine of unjust enrichment has been invoked for rejecting the said refund claim. Conclusion - i) The service tax was not leviable on amount of royalty received by the appellants M/s. BCCL. ii) The amount paid by the appellant for which refund has been claimed was the amount not towards the duty but was an amount wrongly deposited by the appellant. However, since the appellant had collected service tax for the relevant period and there is no evidence of reversal, the doctrine of unjust enrichment applies and refund claim rightly rejected. Appeal allowed. Case-Laws Service Tax Fri, 06 Jun 2025 00:00:00 +0530