TaxTMI 
TaxTMI 
2026 (5) TMI 436
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....of products including Recombinant Human Erythropoiesis (EPO) and TheraCIM h-R3 Humanized Monoclonal Antibody (Nimotuzumab) by M/s. CIMAB, who in turn appointed appellant as its representative for all the activities relating to commercialition of the said product for a consideration of Rs.12,88,50,000/- to M/s. BIOCON Ltd. for territories outside India. Alleging that the amount so received by the appellant for transfer of marketing rights to M/s. BIOCON Ltd. is leviable to service tax under the taxable category of Intellectual Property Service. Consequently, service tax amount of Rs.1,59,25,860/- with interest and penalty was proposed to be recovered by issuing show-cause notice on 03.03.2011. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 2.1 At the outset, the learned advocate submitted that the appellant was formed as a result of Joint Venture Agreement dated 22.02.2002 by M/s. Biocon Ltd. and CIMAB, SA. By virtue of third amendment dated 13.02.2008, the appellant was granted non-exclusive right for registering, importing, promoting, distributing, selling and all other related activities for the commercialisation of Recombinant ....
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.... tax under the category of Intellectual Property Right Service for receiving consideration on transfer of marketing right of Oncology and Immunosuppressant Solutions against an agreement dated 13.02.2008 to M/s. BIOCON Ltd. during the relevant period. 6. Under the third amendment, with effect from 13.02.2008, to the Joint Venture Agreement dated 22.02.2002, M/s. BIOCON Ltd. under Clause 32 was required to make the following payments to the Appellant: "32. In consideration of BBPL appointing BIOCON as the sole representative for registering, importing, promoting, distributing, selling and, in general, for all the activities related to the commercialisation of EPO and Nimotuzumab respectively, BIOCON accepts to pay BBPL the following. • USD 1,500,000 (United States Dollars One Million Five Hundred Thousand Only) before June 30, 2008 towards right for sale of EPO in the New Territories for EPO; • USD 1,500,000 (United States Dollars One Million Five Hundred Thousand Only) before December 31, 2008 towards right for sale of Nimotuzumab in the New Territories for Nimotuzumab; 7. The department proposed to levy service tax considering the same as I....
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.... 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). 7. The Commissioner in the Impugned order has observed as follows: "34. In the present case, though there is no transfer of Brand name, there exist transfer of technical know-how and training of staff. Technical know-how is much more important than brand name. The transfer of brand name does not have any meaning for the buyer until and unless the know-how for the manufacture of the products is also transferred. The Board has never said that payment towards brand name alone should be taxed and not the technical know-how. Therefore Technical know-how has to be taxed as Intellectual Property Service." Thus, the Commissioner in the impugned order purely based on transfer of technical Knowhow has held the service to be intellectual property service. This issues whether the royalty paid on transfer of technical know-how is no longer res-i....
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....his submission, he relied upon the following decisions wherein the demand of Service Tax under Intellectual Property Right service on technical know-how has been set aside. (i) Asea Brown Boveri Ltd. v. CCE & ST, LTU, Bangalore [2017 (49) S.T.R. 209 (Tri.-Bang.)] (ii) ABB Ltd. v. CCE, C&ST, Bangalore (LTU) [Final Order No. 20183/2016, dated 2-2-2016] (iii) Tata Consultancy Services Ltd. v. CCE & ST, LTU, Mumbai [2018-VIL-545-CESTAT-MUM-ST] (iv) Munjal Showa Ltd. v. CCE & ST, Delhi (Gurgaon) [2017 (5) G.S.T.L. 145 (Tri.-Chan.)] (v) Catapro Technologies v. CCE, Nashik [2017-VIL-534-CESTAT-MUM-ST] (vi) Catapro Technologies v. CCE, Nashik [2017 (48) S.T.R. 94 (Tri.-Mum.)] (vii) Bharat Oman Refineries Ltd. CCE & ST, Bhopal [2017 (4) G.S.T.L. 221 (Tri.-Del.)] (viii) Reliance Industries Ltd. v. CCE & ST, LTU, Mumbai [2016 (44) S.T.R. 82 (Tri.-Mum.)] (ix) Rochem Seperation Systems (India) Pvt. Ltd. v. CST, Mumbai [2015 (39) S.T.R. 112 (Tri.-Mum.)] (x) Tata Consultancy Services Ltd. v. CST, Mumbai [2015-TIOL-2370-CESTAT-MUM = 2016 (41) S.T.R. 121 (Tri.)] (xi) Thermax Ltd. v. CCE, Pune [2014 (3....
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....ows : (55b) "intellectual property service " means, - (a) transferring, [temporarily]; or (b) Permitting the use or enjoyment of, any intellectual property right;] "Taxable Service" concerning intellectual property service as defined in Section 65(105)(zzr) is as follows : Section 65(105) "taxable service" (concerning intellectual property right) means any [service provided or to be provided] - (zzr) to any person, by the holder of intellectual property right, in relation to intellectual property service. 6.5.2 From the above provisions concerning 'Intellectual Property Right', 'Intellectual Property Service', and 'Taxable Service of Intellectual Property Right ', we find that for any services to be covered under the taxable service concerning intellectual property right, the following ingredients need to be present : (i) the said service need to have the element of the 'intellectual property right' and covered as such by the definition of 'intellectual property right' given in the Section 65(55a) of the Finance Act, 1994. (ii) There has to be temporary transfer of any intellectual property right OR th....
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....r any other similar intangible property, excluding copyright. • Such right over intangible property must be recognized under any India law for the time being in force. • Intellectual property rights which are not covered by India law like integrated circuits or undisclosed information would therefore not be covered under the taxable services. • Service provider must do one of the following : (a) Transfer of intangible property to another person. (b) Permit the use or enjoyment of the intellectual right. 7.3 Further we find that know-how is not recognized as Intellectual Property law by any Indian Law for the time being in force. In fact know-how is the undisclosed information cited by the Department clarification dated 10-9-2004 as example of intellectual property right not covered by any Indian law. The transaction in the present case was for know-how which is in the nature of property, no service was provided by the foreign companies. This issue has been considered by the Tribunal in the appellant's own case which is reported in 2017 (49) S.T.R. 209 and it was held by the Division Bench that the right to know-how d....