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2012 (6) TMI 454 - CESTAT, NEW DELHIIntellectual property right service - Exemption under Notification 12/2003-ST - deduction of goods sold from gross value - The Appellants owned the trade Mark "EICHER" registered in India in respect of Tractors. They entered into an agreement dated 27-05-2005 for permitting M/s Tafe Motors and Tractors Limited (TMTL) and received Rs.39.60 crores in consideration of such transfer. They did not pay any service tax on this amount. Held that:- When the contract is read as a whole it is indeed a contract for transfer of the right to use the Trademark for limited purposes but on a permanent basis. The fact that certain post transfer conditions are attached to transfer of the right does not change the nature of the contract. A person selling a particular product to a dealer may impose post sale conditions like he should not re-sell the goods in loose forms, the dealer should sell the product only from a premises displaying the name of the manufacturer, the dealer should not re-sell the goods in other than specified territories or that he should not resell the goods or to the effect that the goods sold should be used only for a specified purpose only does not alter the nature of the transaction as a sale. So the transaction would not be covered by clause (a) of section 65 (55b). But we do not see any reason why the transaction would not be covered by clause (b) section 65 (55b). So the transaction amounts to Intellectual Property Service. Definition of sale in section 2 (h) of Central Excise Act - held that:- This provisions can not be interpreted to mean that provisions that are relevant for tangible goods will apply for intangible goods when the subject involved requires a distinction to be made. Definition of sale in section 4 of Sale of Goods Act, 1930 - held that:- The goods namely the Trade Mark "Eicher" continues to be the property of the transferor or more appropriately the licensor which is the word used in the concerned agreement. Secondly an agreement to sell become a sale only when all the conditions of the agreement are complied with. In this case there are conditions to be complied with by the Appellants in perpetuity and at no point of time the conditions be considered to be fully complied with. There is no sale involved and the appellants are not entitled to the benefits under Notification 12/2003 is a valid argument.
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