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2015 (11) TMI 235 - CESTAT NEW DELHI

2015 (11) TMI 235 - CESTAT NEW DELHI - 2016 (42) S.T.R. 754 (Tri. - Del.) - Demand of service tax - intellectual property rights - Reverse charge mechanism - whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002 - Held that:- Agreement for grant of license or transfer / permission to use technology was effected before 10.09.2004. The fact that M/s DHPL continued to manufacture and sell using such transferred technology even after the .....

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as provided on continuous basis is incorrect. Only payment of service was spread over a period of time. The service was performed as soon as the technology was transferred. - Decided against Revenue. - Service Tax Appeal No. 880 of 2011, Service Tax Appeal No. 427 of 2012 - Final Order Nos. 53230 - 53231/ 2015 - Dated:- 16-10-2015 - Hon ble Mr. Justice G. Raghuram, President And Hon ble Mr. B. Ravichandran, Member (Technical) For the Petitioner : Shri Ramesh Sharma, Consultant with Sh. D.S. Negi .....

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HPL to Denso, Japan in the form of upfront lumpsum payment and running royalty based on number of products manufactured by M/s DHPL using the said technology. Proceedings were initiated against the M/s DHPL for recovery of service tax under the category of intellectual property rights on reverse charge basis. Show cause notice dated 12.10.2009 to demand a service tax of ₹ 42,54,763/- and another show cause notice dated 23.05.2008 to demand service tax of ₹ 2,66,31,602/- were issued t .....

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by the Commissioner (Adjudication) Service Tax, New Delhi. He dropped the demand vide his order dated 28.02.2009. Aggrieved by this order the Revenue is in appeal before us. 2. Shri Ramesh Sharma, ld. Consultant appearing on behalf of M/s DHPL pleaded that on the same set of facts two different decisions have been arrived at by the departmental authorities. The ld. Commissioner in his order dated 28.02.2011 examined all the legal issues alongwith the terms of the contract and arrived at the deci .....

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and the right to manufacture and sell auto components using the said technology. Such transfer / permission to use technology had happened much before the service tax was introduced on intellectual property services. The payment for such transfer of technology either in lumpsum or over a period in the form of running royalty has no effect on the service tax liability. He further contended that in terms of proviso to Rule 6(1) of Service Tax Rules, 2004 no service tax shall be payable for the pa .....

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r dated 28.02.2011 he submitted that the said order correctly follows the principle laid down by the decisions of the Tribunal (supra) and as such prayed for upholding the same. 4. Ld. AR Shri Ranjan Khanna stated that the Commissioner has erred in dropping the demand. He submitted Articles 3 and 8 of the impugned agreement will indicate that though the agreement entered into is in 2002 there is a provision for revision of technology and provision to make available such revised technology to M/s .....

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a period of time including after the introduction of the service tax on IPR. Hence, M/s DHPL cannot escape liability of service tax after 10.09.2004. 5. Having heard both the sides and examined the terms of the agreement and other facts of the case, we find that the point for decision is whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002. We find similar issue came up before this Tribunal for decision. In the case of Modi-Mundipha .....

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transfer which is held to be not a taxable event as the same was prior to 10.09.2004. The Tribunal did not agree with the argument of Revenue that use of formula and the know-how will amount to continuous used service covered by the periodic payment. 6. In the case of Petronet LNG Ltd. vs. CST, New Delhi (supra) the Tribunal held that regarding taxability of appellant in respect supply of tangible goods the date of long term charter agreement will be relevant though the tangible goods were cont .....

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