TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 217
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....a ("confidential information"). The Department felt that the said activity would fall under Intellectual Property Rights Service (IPRS) under Section 65(55b) and in terms of Rule 2(1)(d)(iv) of Service Tax Rules 1994 read with Rule 3(iii) of Taxation of Services (provided from outside India and received in India) Rules 2006, the appellant was liable to pay service tax on said taxable service. On being pointed out, the appellant informed the Department that they have paid an amount of Rs. 1,76,95,656/- through the credit balance available in their RG23C Part-II and paid an amount of Rs. 1,85,601/- in cash towards the total service tax liability of Rs. 1,78,37,676/-. However, the Department in view of Rule 2(p) of Cenvat Credit Rules 2004 (CCR) and as per Rule 5 of Taxation of Service (provided from outside India and received in India) Rules 2006 held that the taxable service provided from outside India and received in India shall not be treated as output service for the purpose of availing credit of duty of excise paid on any input or paid on any input service under CCR. It was the view of the Department that the appellants are engaged in the manufacture of automobiles for which the....
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....2) TMI 184 - CESTAT HYDERABAD] "12.2. The cumulative takeaway from the above orders is that in order to fasten the Service Tax liability, the person providing the service ( technical knowhow ) has to be registered with the Patents Authority in India and that if the IPR is registered in any foreign country, but is not registered in India, the same will not attract the Service Tax." (f) M/s. CG Power & Industrial Solution Ltd (formerly 'Crompton Greaves Ltd') vs. Commissioner, CGST & Central Excise, Bhopal [2025 (4) TMI 446 - CESTAT NEW DELHI) (g) M/s. GE Medical Systems (India) Pvt Ltd vs. Commissioner of Service Tax Bangalore [2014 (12) TMI 1545 - CESTAT BANGALORE] (h) M/s. Hindustan Aeronautics Limited vs. Commissioner of Central Excise, Customs and Service Tax, Bhubaneswar [2024 (4) TMI 726 - CESTAT KOLKATA] (i) INTAS Pharmaceuticals Ltd vs. C.S.T.- Service Tax, Ahmedabad [2023 (11) TMI 169 - CESTAT AHMEDABAD] (j) M/s. Reebok India Company vs. Commissioner of Central Excise and Service Tax, Panchkula and Commissioner of Service Tax, Delhi [2023 (8) TMI 1320 - CESTAT CHANDIGARH] 4. Learned Advocate further submits that thoug....
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....ed. He has also relied in the case of Commissioner of Central Excise, Belgaum Vs Shri Tubes & Steels Pvt Ltd., [2011 (21) STR 370 (Tri-Bang)] and ITC Ltd., Vs Commissioner of Central Excise, Guntur [2011 (23) STR 41 (Tri-Bang)] in support that the service tax could not have been paid by way of debiting the RG23A Part II. 8. Heard both the sides and perused the records. 9. The core issues to be decided in this case are as under: a) whether the demand made under the category of IPRS is correct in the facts of the case or otherwise b) whether the discharge of service tax liability by debiting the Cenvat credit account wherein they had availed credit in respect of capital goods is correct or otherwise 10. In so far as the first issue is concerned, from the Show Cause Notice it is apparent that the only allegation made against the appellant is that there was to be exchange of non-public information including without limitation designs, plans, ideas and cost data. The Department felt that this sharing of information would be covered under the IPRS. As per Section 65(55b) Intellectual Proper Service means - a) transferring temporarily or b) per....
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....zzr). In support of this relevant para is cited below: 19. On going through the provisions of the Finance Act, 1994, we find that in order to tax IPR under service tax, such IPR should be registered under Indian Law whereas in the present case, the same is admittedly not registered under Indian Law. However, CBEC Circular dated 17.09.2004 relied upon by the Ld. AR does not help the Revenue as in the said circular it has been clarified that the taxable service include only such IPR except copyrights that are prescribed under the law for the time being in force, as the term 'time being in force' implies that, as are applicable in India and IPR covered under Indian Law in force alone are chargeable to service tax and IPR like integrated circuits or undisclosed information would not cover under the taxable services. The only issue involved in the present case relates to levy of service tax on payment of royalty/fee on transfer of technical know-how and the same has been considered by the Tribunal in various cases and has consistently held that know-how is not an IPR within the meaning of service tax law and consequently its transfer is not liable to service tax. Further, Circu....
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....d Intellectual Property rights covered under Indian law in force alone are chargeable to service tax and Intellectual Property Rights like Integrated Circuits or Undisclosed Information would not cover under the taxable services. Admittedly, Trade Mark rights which have been used by the appellant-assessee are not registered in India, therefore, the same are not liable to tax under IPR service" (iii) Modi Mundi Pharma Beauty Products v. CST 2020-VIL-256-CESTAT-DEL-ST "50. It is, therefore, more than apparent that the grant of exclusive right to the Appellant by Mauritius Revlon to use the 'know how' in any plant in accordance with the processes, specifications and recipes thereof in connection with the manufacture, marketing, sale and distribution of Revlon Products would not fall inthe definition of 'intellectual property right' so as to make it taxable under section 65(105) (zzr) of the Finance Act." (iv) SICPA India v CST 2018 (15) G.S.T.L. 375 (Tri. - Kolkata) (v) Technova Imaging System Pvt. Ltd. v. CCE 2018 VIL 1090 CESTAT Mum ST = 2019 (31) G.S.T.L. 472 (tri-Mumbai) 6. In view of the above, we find that the issue is....
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.... Court in the case of Mccann Erickson (India) Ltd., supra, inter alia, examined this issue. Hon'ble High Court framed the substantive question of law as under: "Did Customs, Excise & Service Tax Appellate Tribunal [CESTAT] fall into error in holding that during the period from April, 2006 to March, 2008, the Assessee/Appellant could not have discharged its tax liability by utilizing the credit available to it, given that the explanation to Rule 3(4) of the Credit Rules, 2004 was brought into force from 1st July, 2012." The Hon'ble High Court examined various provisions including Section 66(a) of Finance Act 1994, Rule 2(1)(d)(iv) of Service Tax Rules etc., and thereafter examined the provisions of CCR and keeping in view the judgment of Hon'ble High Court of Mumbai in U.S.V. Ltd.,-2019-VIL-334-BOM-S.T. held the view of the Tribunal as not correct and set aside the view. 28. We may also observe, in this context, that this issue has engaged the attention of various High Courts from time to time, including, inter alia, the High Court of Rajasthan in U.O.I. v. Kansara Modlers Ltd. - 2018 (15) G.S.T.L. 255 (Raj.), the High Court of Karnataka in in CST v. Aravind Fas....
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....nd the demand unsustainable. Para 4 of the order is cited below: "4. The short question for determination is whether the appellants could have paid Service Tax on services provided by service providers located outside India, by utilizing the Cenvat Credit available with them or otherwise. In so far as liability to pay Service Tax under Reverse Charge Mechanism (RCM), nobody disputing that they were liable to pay Service Tax under RCM. Therefore, the only dispute is whether they could have utilized the credit available with them for discharge of said Service Tax liability for the period prior to 01.07.2012, when a specific provision was made for payment of such tax only through cash. We find that in the case of Mccann Erickson (India) Ltd., supra, the Hon'ble High Court has clearly held the issue in favour of the appellant by relying on various other judgments of other High Courts including that of Bombay High Court in the case of CCE Vs USV Ltd., [2019-VIL-334-BOM-ST]. We, further find that the Co-ordinate Bench at Bangalore has also held that the appellants were entitled to utilize the Cenvat Credit towards discharge of Service Tax under RCM when the Services have been re....