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2013 (8) TMI 119 - AT - Service Tax‘Intellectual Property Rights Services’ – Assessee entered into agreement with the M/s. Purolite, whereby M/s. Purolite agreed to irrevocably transfer to Thermax all claims, rights and interests necessary to use Purolite Technology and Information and Thermax shall jointly co-own with Purolite the Purolite Technology and Information in perpetuity and not subject to any geographical restrictions or customer restrictions. Upon the technology transfer, Thermax became co-owner in the Purolite Techology and Information and was entitled to use, assign, sell, license, transfer or convey their respective interests in the Purolite technology and information - Transfer of technology from Purolite USA to Thermax Ltd. India amounts to receipt of service by Thermax and the service so received merited classification under "intellectual property rights service" as defined in Section 65(55a) and 65 (55b) read with Section 65(105) (zzr) of the Finance Act, 1994 – Held that:- As per Section 65 (55a) "intellectual property right" means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright - To constitute a intellectual property it should be either a trade mark, design patent or any other similar intangible property under any law for the time being in force in India. As per the decision of the US District Court of Pennsylvania, the information obtained by Thermax in contravention of the US law was relating to Purolit's trade secrets and/or confidential information - It is well settled that there is no law relating to the trade secrets or confidential information in India. Therefore, the trade secrets obtained by Thermax from Purolite, USA is not an intellectual property right as defined in Section 65 (55a). Thermax became a co-owner of the intellectual property right and was entitled to use, assign, sell, license, transfer or convey their interests in the in the said trade secret/information. In other words, it was not a temporary transfer of an intellectual property right or a permission to use or enjoy the intellectual property right. The transaction involved ownership of the intellectual property right and therefore, the transaction does not satisfy the requirement of Section 65 (55b) - In this regard, the circular issued on 17.09.2004 by the Board at the time of introduction of IPR service is relevant and the same states that IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. Decision of Hon’ble Tribunal in the case of Royal Western India Turf Club Ltd.[2012 (11) TMI 526 - CESTAT, MUMBAI] is squarely applicable in the present case , wherein it has been held “ …demand for service tax has been made under the category of ‘Intellectual Property Right Services', neither the show-cause notices nor the orders relating thereto give a clear proposal or finding as to what is the intellectual property rights involved in the transactions, i.e., whether it is a patent, copy rights, trade mark or design or any other category of intellectual property rights. When service tax is confirmed under the taxable service category of Intellectual Property Right Services, the order confirming the demand should clearly classify the transaction under one or more of the Intellectual Property Rights which are covered under Intellectual Property Right Services' law. The Boards Circular issued on 17.09.2004 in this regard makes it abundantly clear that the Intellectual Property Right Services covered under the service tax laws should be in respect of such services in respect of which laws have been made in India and such laws should cover the Intellectual Property Right Services involved and only in such a situation, demand for service tax can be raised whenever there is a transfer of Intellectual Property Rights by the holder of the Intellectual Property Right to the person who receives or uses the Intellectual Property Rights. In the impugned orders we do not find any such findings by the authorities" – Relying upon the above decision appeal in the present case allowed – Decided in favor of Assessee.
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