2015 (11) TMI 235

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....nvolved is same in both the appeals. M/s Denso Haryana Pvt. Limited (DHPL) are engaged in the manufacture of dutiable auto components. They entered into an agreement with M/s Denso, Japan in 2002 for transfer of technology for manufacture of auto components. The consideration was to be paid by DHPL to Denso, Japan in the form of upfront lumpsum payment and running royalty based on number of products manufactured by M/s DHPL using the said technology. Proceedings were initiated against the M/s DHPL for recovery of service tax under the category of intellectual property rights on reverse charge basis. Show cause notice dated 12.10.2009 to demand a service tax of Rs. 42,54,763/- and another show cause notice dated 23.05.2008 to demand service ....

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.... on 20.06.2002 is for transfer of technology and the right to manufacture and sell auto components using the said technology. Such transfer / permission to use technology had happened much before the service tax was introduced on intellectual property services. The payment for such transfer of technology either in lumpsum or over a period in the form of running royalty has no effect on the service tax liability.  He further contended that in terms of proviso to Rule 6(1) of Service Tax Rules, 2004 no service tax shall be payable for the part or whole of the services which is attributable to services provided during the period when such services were not taxable. Ld. Consultant relied on the decision of the Tribunal in the case of Modi-....

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....nd examined the terms of the agreement and other facts of the case, we find that the point for decision is whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002. We find similar issue came up before this Tribunal for decision. In the case of Modi-Mundipharma Pvt. Ltd. (supra) it was held that whether payment for such services is made in one lumpsum or made in instalments or based on quantum of sale by the appellant on an annual basis is not relevant to consider as to when the services were actually rendered. It was held that the technical know-how was transferred in terms of the agreement and appellant manufacturing and selling product over a period using the technical know-how ....