TaxTMI 
TaxTMI 
2017 (9) TMI 1325
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....atent rights of M/s.SICPA Holding Switzerland. As per Articles 6.1 and 6.2 of the Agreement, the Noticee would pay a lump-sum of SFr.525000.00 and a royalty of 5% on net sales of all the products and parts thereof, manufactured and/or sold in India by the Applicant during the validity period of the Agreement. As per Clause 5.1 of Technical Collaboration, the Applicant have been granted the Right to use Technical information as well as patents of M/s.SICPA Holding Switzerland which the licensor filed or would file for said Technical information. Thereby, the Department came to the conclusion that the activity of the Applicant is falling under IPR service, as defined under Section 65(55b), being a taxable service under Section 105(zzr) of the Finance Act, 1994. The applicant neither took registration nor paid Service Tax on the said service received for the period from May, 2005 to March, 2009. Accordingly, the Department issued a show-cause notice on 10.08.2009 against the Applicant for demand of Service Tax of Rs. 1,94,44,470.00 and proposal for penalty under various provisions of Finance Act, 1994. The learned Commissioner confirmed the demand in the show-cause notice and imposed ....
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....ical information and assistance for the manufacture of its products to the appellant. The said know-how was already in the possession and use of SICPA Holding Switzerland, which was transferred to the appellant along with a right to manufacture and sell the product using that know-how. 4.7 The contention is that the Agreement for provision of technical information and know-how, was entered into on 17th January, 1991 and the appellant received the technical information and know-how soon after that date. Therefore, this transaction cannot be taxed as an Intellectual Property Service under Section 65(55b) read with 65(105(zzr) of the Finance Act, 1994, as the Intellectual Property Service was brought within service tax net w.e.f. 10.09.2004. 4.8 The appellant placed reliance on the Tribunal s decision in the case of Modi-Mundipharma Pvt.Ltd. v. Commissioner of Central Excise, Meerut reported in 2009 (15) STR 713 (Tri.-Del.). 4.9 The contention of the appellant is that no service tax is payable as there was no levy at the time of occurrence of the taxable event at the time of Agreement. In fact, assuming that the transfer of know-how is a service, such transfer cannot be said to be ....
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....ppellant. It is also the contention of the learned counsel for the department that the transfer of know-how as per the Technical Agreement was not on one time basis but was on continual basis, and was to be transmitted to enable the appellant to manufacture the products on continual basis. In so far as the contention of the appellant that they are entitled to abatement for the R. & D. Cess paid for correct computation of the liability, the learned Counsel for the department submitted that the learned adjudicating authority has clearly observed that in the absence of disclosure of the total amount of Royalty paid to the appellant, vide letter dated 05.06.2008 issued by the jurisdictional Range Officer, the appellant had not been able to substantiate their claim of incorrect computation of liability. As regards the limitation aspect, the contention of the learned Counsel for the department is that pursuant to the said Agreement in 1991, though they received services six to seven months prior to the levy of Tax on the said services, but they did not register themselves with the department, nor did they pay any Service Tax during the period May, 2005 to March, 2009, which clearly estab....
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....eived taxable service under the category of Intellectual Property Right service during the relevant period. The admitted facts of the case are that the technical know-how, engineering design licence involved in these agreements with foreign service providers are not registered in India under Indian law. However, the original authority held that registration of IPR under Indian law is only for obtaining protection from its infringement. He observed that the levy of tax is not dependent on the fact of such registration. We find that such conclusion is not legally tenable and is beyond the scope of taxable service as defined in Finance Act, 1994 : Section 65(105)(zzr) of the Act defines in the taxable IPR service tax as under : Taxable service means any service provided or to be provided to any person by the holder of intellectual property right, in relation to intellectual property service; Section 65(55a) of the Act defines Intellectual Property Right to mean as under : Intellectual Property Right means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include ....