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2016 (1) TMI 442 - AT - Service TaxLevy of service tax on the royalty under reverse charge mechanism - Intellectual Property Service - scope of the work "namely" - The appellant demonstrates and imparts training to the customers who use their software for their own use under specific lock code system. The master key of the locking code system is entirely in the possession of M/s.Fluent Inc.; they are the owners of the said mater key. - Held that:- the appellant are a wholly owned subsidiary of Fluent Inc. USA. It can hardly be expected that a company will transfer its intellectual property right to its wholly owned subsidiary. Specific clauses of the Agreement clearly show that the appellant cannot disclose transfer or otherwise make available any software products or copies thereof to others. The appellant is only authorised to retain the trade mark of Fluent Inc which are provided by the latter. Fluent Inc. products sold by the appellant can bear the markings of Fluent Inc. The appellant is merely distributing, marketing and supporting set of computer programme known as FI software. There is absolutely no indication of any transfer of intellectual property right on a plain reading of the Agreement. Neither do we find any hidden or deeper meaning in the Agreement which would indicate transfer of intellectual property right. Demand of service tax is set aside - Decided in favor assessee.
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