TaxTMI 
TaxTMI 
2025 (6) TMI 595
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....er Section 73(1) of the Finance Act, 1994 ('Act') Refund of Rs.79,52,935/- is rejected 2. The facts in brief which have culminated into the said order, in brief, are as follows: 2.1 M/s. Bajaj Resources Limited [Formerly known as M/s. Bajaj Consumer Care Limited (BCCL)], the appellant herein, are registered with the service tax department under the category of "Intellectual Property Services". The appellants were paying service tax under the said category towards grant of license to M/s. Bajaj Corp Limited (hereinafter referred to as 'BCL'), a wholly owned subsidiary of M/s. BCCL for use of its trademark on a non- exclusive basis in the defined territory (State of Andhra Pradesh) for a period of 10 years in terms of Trademarks License Agreement dated 12.03.2008. Vide agreement dated 22.01.2010, the tenure of the license was increased from 10 years to 25 years and the territory was State of Rajasthan. The said agreement was further novated vide agreement dated 24.02.2010 vide which the tenure was increased from 25 years to 99 years and the license was granted on exclusive basis worldwide. However, M/s. BCCL still continue to pay service tax under the category of Intellectual Prop....
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....s. Both the said proposals have been confirmed vide the Orders-in-Original as indicated in the table above. The proposal of rejection of refund has been accepted even by Commissioner (Appeals). Being aggrieved of the respective orders, as indicated above, both the present appeals have been filed. 3. We have heard Shri B.L. Narasimhan and Ms. Shagun Arora, learned Advocates for the appellant and Shri Aejas Ahmad, learned Authorized Representative for the department. 4. Learned counsel for the appellant has mentioned that vide agreement dated 12.03.2008, the appellant agreed to transfer the right to use of various trademarks licenses in favour of M/s. BCL for 10 years. The right to use of the said trademarks was transferred on a non-exclusive basis within the territory comprising of 19 countries. However, vide agreement dated 24.02.2010, the transfer of right to use the trademark was affected on an exclusive basis and the tenure of agreement was increased to 99 years. Further, the appellant granted right to use the trademarks to M/s. BCL to be used across the whole world. 4.1 It was also stipulated that the appellant would not manufacture any product which were being manufactured ....
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....intellectual property under the category of 'Declared Services'. A permanent transfer of such rights to use would clearly render such a transaction as a 'Deemed Sale'. On such permanent transfer, the person selling these rights no longer remains a 'holder of intellectual property right' and would therefore not come under the purview of the taxable service. Learned counsel has relied upon the following decisions: (i) Bharat Sanchar Nigam Ltd. Vs. Union of India reported as 2006 (3) TMI 1 - Supreme Court (ii) Commissioner of Service Tax, Delhi II Vs. Future Brands reported as 2022 (9) TMI 436-CESTAT New Delhi (iii) Tripti Alcobrew Private Limited Vs. Commissioner of Central Excise & GST, Bhopal reported as 2024 (11) TMI 615-CESTAT New Delhi (iv) Commissioner of Service Tax Delhi Vs. Quick Heal Technologies Limited reported as 2022 (8) TMI 283- Supreme Court Once there was no liability upon appellant to pay service tax, the amount paid under mistake is not tax, hence, is eligible to be refunded. With these submissions, both the appeals are prayed to be allowed. 5. While rebutting these submissions learned Departmental Representative has submitted that the initial agreement b....
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....(v) Kalyan Toll Infrastructure Ltd. Vs. Commissioner of Central Excise and CGST (2024) 20 Centax 540 (Tri.-Del) 5.2 While submitting with respect to rejection of refund, it is mentioned that M/s. BCCL, the appellant, had issued tax invoices to M/s. BCL which included the service tax amount thereby indicating that the tax burden was passed on to M/s. BCL. No documentary evidence was produced by the appellant M/s. BCCL to prove that the burden was not passed on. Resultantly, there is no infirmity when the refund claim has been rejected. Learned Departmental Representative has relied upon the decision of Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India reported in the year 1997. Finally, learned Departmental Representative has relied upon the decision of Hon'ble Supreme Court in the case of ITC Ltd. (supra), vide which it has been held that the refunds cannot be granted unless the assessment is modified. With these submissions, both the orders under challenge i.e. the Order-in-Original dated 24.03.2017 is Appeal No. ST/51121/2017 and Order-in-Appeal No. 695//2018 dated 03.07.2018 are prayed to be upheld and the appeals are prayed to be dismissed. 6. H....
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....or a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made; This provision was incorporated vide the 46th Amendment to the Constitution of India whereby the meaning of sale or purchase of goods was extended, empowering the states to levy sales tax/VAT on the transactions in the nature of "transfer to right to use the goods" which were earlier not exigible to sales tax as such transactions were not covered by the definition of 'sale' as given in the Sale of Go....
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....se of Commissioner of Service Tax, Delhi-II Vs. Future Brands reported as 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. 7.5 Reverting to the facts of the case/the content and intention of novation agreement dated 24.02.2010, we observe following to be the relevant clauses: 2. GRANT OF LICENSE: In pursuance of this agreement and for good and valuable consideration inter alia Royally as mutually agreed between the parties subject to the provision for its revision, the sufficiency, adequacy whereof the BCCL doth hereby acknowledge, and hereby grant UNTO the Licensee a right to use the Licensed Trade Mark(s) together with the goodwill of the business concerned, attached /associated therewith, subject to the terms and conditions of this Agreement. BCCL grants to the Licensee, an non-exclusive license to use the said licensed Trade Marks on or In connection with the manufacture, advertisement, distribution and sale of the Goods within the Territory during the term of the Agreement and strictly in ac....
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....ntire period of the agreement, the transferor, M/s. BCCL/the appellant was also restrained from transferring the same rights to others during the agreed period of transfer. The appellant/transferor also restrained itself to manufacture any goods using the same IPR as stands transfer to M/s. BCL during the entire period of said agreement to transfer IPR. 7.6 In light of these observations, read with the decision of Hon'ble Apex Court in Bharat Sanchar Nigam Ltd. (supra), we hold that the agreed transaction between M/s. BCCL and M/s. BCL was for the transfer of right to use the goods/IPR though for a specified period but to the exclusion of the appellant. The specified period is also substantial i.e. 99 Years. Hence, as held by Hon'ble Supreme Court, the transaction was that of a transfer of right to use goods and was not merely a license to use the goods. Such transfer of right to use, in light of article 366 (29A) of the Constitution is an act of 'Deemed Sale' as different from an act of 'Declared Service' of transferring the use of IPR/goods. The literal meaning of phrase "transfer of right" otherwise is the acquisition of right by the transferee and loss of it by the transferor.....