TaxTMI 
TaxTMI 
2023 (11) TMI 167
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....ed with Benasedo Spa, Italy has received the Technical know how on payment of lump sum fees of Rs.2,94,00,000/-. After making such payment to overseas supplier, as pointed out by their Bank i.e. Oriental Bank of Commerce, Appellant paid Rs. 14,70,000/- as Cess @ 5 % under section 3 of Research and Development Cess Act, 1986 in relation to all payments made for the import of Technology and intimated with copy of Challan of payment to the Bank. Appellant also paid Royalty of Rs 61,96,434/- to Benasedo Spa, Italy as per their Agreement dt. 31-03-2010. The Revenue is of view that the Total Rs.2,94,00,000/- + Rs 61,96,434/- = Rs 3,55,96,434/- paid for receipt of Technical know how Fees & Royalty paid is liable to payment of Service Tax under category "Intellectual Property Service" under Finance Act 1994. Transaction of Rs.2,94,00,000/- for payment to M/s Benasedo Spa, Italy, total Service Tax liability was worth Rs. 30,28,200/-. However, as Appellant had paid the R&D Cess for Rs. 14,70,000/-, exemption of Service Tax for Rs. 14,70,000/- in terms of Service Tax Notification No. 17/2004-ST as amended, was available to Appellant which exempted taxable service in relation to Intellectual P....
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....ased to Appellant after O-I-A No. AHM-EXCUS-003-APP-099-14-15 dated 18-11- 2014 by Commissioner (Appeals), Central Excise, Ahmedabad-I holding that recipient of Service can pay tax from Cenvat Credit Account as reflected in OI- A. Department's Appeal against the said O-I-A dated 18-11-2014 stand dismissed vide the CESTAT Ahmedabad's Final Order No. A/13142/2017 dated 04-10-2017 against which there is no further Appeal by department. 3.1 He also submits that the issues to be decided here are whether (i) Service Tax on "Intellectual Property service" as defined u/s 66(55b) of Finance Act, Appellant is required to pay service tax and (ii) whether it can be discharged from Cenvat Credit Account or not. Regarding discharging Service Tax from Cenvat Credit Account, Appellant has submitted that there was no restriction for Payment of Service Tax from Cenvat Credit under Reverse Charge in terms of Rule 3(4) of Cenvat Credit Rules 2004. Explanation was inserted in Rule 3(4) of Cenvat Credit Rules, 2004 by Notification No. 28/2012- CE(NT) dt. 20-06-2012, w.e.f. 01-07-2012, which provided restrictions that Cenvat credit cannot be used for payment of Service Tax for services, where person lia....
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....ot sustainable on time limitation. The Ingredients i.e. "fraud, collusion or willful mis-statement or suppression of facts, with intent to evade of Service Tax" do not exist in facts of this case. He submits that various Decisions relied upon on Time Limitation are applicable. 3.4 He also submits that Show Cause Notice and demand against Appellant would not be justified if Appellant himself was entitled to avail Cenvat Credit of Service Tax paid under RCM and assessee was in a position to utilize Cenvat Credit for final outward transactions. It is also a settled legal position that Revenue cannot invoke larger period of limitation in cases involving Revenue Neutral Situation, because an assessee could never have any intent to evade payment of tax in revenue neutral situation. He has relied upon plethora of case laws in support of claim of Revenue Neutrality :- 4. Shri Anoop Kumar Mudvel, Superintendent (Authorized Representative) appearing on behalf of Revenue, reiterates the finding of impugned orders and submits that as Service Tax was payable in cash under RCM and to reject the Appeal filed by Appellant. 5. We have carefully considered the submissions made by both sides and p....
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....f 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 above provisions regarding levy of service tax on IPR it is mandatory that the Intectual Property Right is registered or governed by law in India. In the fact of the present case the service provider being not located in India, it's Intectual Property Right is not registered under any law in India, therefore for this reason itself the service received by the appellant is clearly not taxable under the reverse charge mechanism in the hands of the appellant. We find that the decisions relied upon by the appellant are clearly applicable in this case. Thus, on issue about Appellant's liability to pay Service Tax on "Intellectual Property service" as defined u/s 66(55b) of Finance Act, 1944 or otherwise, we find force in the submissions of Appellant supported by following....