TaxTMI 
TaxTMI 
TaxTMI 
2020 (11) TMI 391
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....ay after the due date till the actual payment of the outstanding amount of service tax under Section 76 of the Finance Act, 1994. iv. Penalty of Rs. 5000/- (Rupees Five Thousand only) under Section 77(1) (a) of the Finance Act, 1994 for violating the provisions of Section 69 read with Rule 4 of Service Tax Rule, 1994. v. Penalty of Rs. 20,03,80,320/- (Rupees Twenty Crores Three Lakhs Eighty Thousand Three Hundred and Twenty only) under Section 78 of the Finance Act, 1994. 2. Briefly the facts of the present case are that the appellants are registered under the category of 'Sponsorship Service, Information Technology Software Service, Management Consultant, Consulting Engineers, Banking and Financial, Scientific and Consulting Service, Scientific Testing and Certification Service' etc. During one of the audits conducted for the period April 2005 to February 2010, the audit party sought details from the appellant, inter alia, with respect to expenditure in foreign currency incurred by the appellant, during the financial year 2006-2007. Specifically, one of the items under scrutiny was with respect to assignment of trademark by Foster's Australia Ltd. (Fosters) to the appellant f....
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....n the books of the appellant and admitted even in the Income Tax assessment order for the assessment year 2007-08. He further submitted that the learned Commissioner has relied on Clause 5 of the Deed of Assignment under which, exclusive, perpetual and irrevocable license is granted to the appellant with respect to Foster Brewing Intellectual Property. Foster Brewing Intellectual Property consists of intellectual property rights relating to the brewing and the technical aspects of packaging Foster's Lager in India. Learned counsel also submits that these are technical knowhow rights which are not recognized in India under the laws relating to Intellectual Property Rights and further these are given in perpetuity and irrevocable and are thus as good as sale or assignment. For this submission, the learned counsel has relied upon the following decisions: a. Tata Consultancy Services Ltd. Vs. Commissioner of Service Tax, Mumbai reported in 2016 (41) S.T.R. 121 (Tri.-Mumbai) b. ABB Ltd. Vs. Commissioner of C.Ex. & S.T., LTU, Bangalore reported in 2019 (24) G.S.T.L. 55 (Tri.-Bang.) c. Asea Brown Boveri Ltd. Vs. Commr. of C. Ex. & S.T., LTU, Bangalore reported in 2017 (49) S.T.R. 20....
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....S.T.R. 318 (Tri.-Mumbai) 4.3. He also submitted that the learned Commissioner has not adduced any evidence to the contrary, except recording his understanding in para 67 as to why the Deed of Assignment does not amount to permanent transfer. According to the counsel, the learned Commissioner has totally misread and misconstrued various clauses in the Deed of Assignment and has wrongly come to the conclusion that it is not the permanent transfer of brand in favour of the appellant. Learned counsel also submitted that the entire demand is barred by limitation and show-cause notice has been issued by invoking the extended period of limitation. The present show-cause notice was issued on 21/04/2011 and the Deed of Assignment was executed on 12/09/2006 and during the same period, the appellant was audited by the Revenue and separate show-cause notice No. 67/08-09 dated 31/03/2009 was issued for the period 10/09/2004 to 31/03/2008 and the present show-cause notice for the over lapping period being the second show-cause notice for the same period cannot be issued by invoking the extended period of limitation. He further submitted that since the transaction of Deed of Assignment having be....
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....f Central Excise Vs. M/s. Mehta & Co. - 2011 (2) TMI 2 - SC 6. We have considered the submissions made by both the parties and have perused the material on record. The only issue involved in the present case is whether the appellant is required to pay service tax on a reverse charge basis for the payment made to Fosters Australia towards permanent transfer of Fosters trademark and brand under the Deed of Assignment. Before we proceed to examine the said question, it would be apposite to take note of relevant provisions of the Finance Act, 1994 relating to Intellectual Property Rights. "Intellectual Property Right" as defined under Section 65(55a) of Finance Act, 1994 is as follows : [(55a) "intellectual property right" means any right to intangible property, namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright; Which has been inserted by Finance Act, 2004 dated 10-9-2004 (made effective from 10-9-2004) "Intellectual Property Service" as defined under Section 65(55b) is as follows : (55b) "intellectual property service" means, - (a) transferring, [temporarily]; or (b) P....
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.... expressly agreed otherwise between the Parties) perpetual, irrevocable license, effective from the Commencement Date, relating to the Foster's Brewing Intellectual Property, to use, enjoy and adapt it (in accordance with any other terms agreed by the Parties) for the purpose of brewing, packaging and marketing Foster's Beer within the Territory with a right to sub-license such right to any licensee of the Foster's Brand for use in the Territory, subject however to compliance with other terms agreed in writing by the Parties." Clause 7.1 of the Deed reads as follows: "No party may assign or otherwise deal with a right under this document, or allow any interest in such right to arise or be varied, in each case without prior written consent of the other parties, which consent must not be unreasonably withheld or delayed. Any assignment or purported assignment in breach of clause 7.1 will be of no effect. For the avoidance of doubt, whilst the parties have agreed certain conditions subject to which the Trademarks or Foster's Brand Intellectual Property may be transferred, nothing in this clause 7.1 will be construed as restricting the Assignee's right to transfer the Trademarks or ....
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.... (except copy-right) that are prescribed under law for the time being in force. As the phrase 'law for the time being in force' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services (emphasis supplied). 9.2 A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs. 9.3 In case a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the cess amount so paid would be deductible from the total service tax payable (refer Notification No. 17/2004-S.T., dated 10-9-2004)." From the contents of above Para 9 of C.B.E. & C. Circular dated 10-9-2004 it is clear that the wordings "under any law for the time being in force" means the laws as applicable in India. It clarif....
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.... And Intellectual Property Right as defined under Section 65(55a) 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 copyright. 4.1 Short question to be decided is whether the transfer of technical 'know-how' received by the appellant is a service which may be categorized under "Intellectual Property Right Services". We find that the definition of Intellectual Property Right must be satisfied to term the services received by the appellant as Intellectual Property Right Services. We find no clue at all in the records as to which type of Intellectual Property Right is being assigned to the "Technical know-how" received by the appellant. It is obvious from the definition of Intellectual Property Right that the right has to be a specific Right under a specific Law. Examples are given under the definition such as the Trade Mark which is a right provided under "Trade Marks Act". Similarly the right mentioned as 'design' in the definition is a right under the "Design Act". Therefore we find that the technical know-how received by the appellant and the roya....
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.... India, Governing such IPR and only IPR covered under the Indian law in force are chargeable to Service Tax. It is well known that there is no law governing trade secrets/confidential information in India and therefore, the rights obtained by the appellant does not constitute intellectual property right as defined in law. Secondly, it is also very clear from the said Circular that a permanent transfer of intellectual property right does not amount to rendering of service. In the present case, the appellant has become a co-owner of the intellectual property which would mean that the transfer is permanent. Therefore, the transaction does not come under the purview of Section 65(55b) of the Finance Act, 1994." 6.5. We have gone through the decisions relied upon by the learned DR. These decisions cited supra are not applicable to the facts of the present case and are distinguishable on facts. 7. In view of our discussion, analysis and the case-laws quoted, it is our considered opinion that the assignment of trademark and the IPR amounts to permanent transfer and no service tax is applicable on permanent transfer of IP Rights by Foster's to the appellant. As far as invoking the extend....