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2016 (6) TMI 1108 - CESTAT MUMBAI

2016 (6) TMI 1108 - CESTAT MUMBAI - 2016 (44) S.T.R. 82 (Tri. - Mumbai) - Import of Intellectual Property Services (IPR services) - Reverse charge - revenue neutral exercise - payment for right to use/enjoy confidential/technical know-how and patents by overseas entities - out of the six different agreement, only the patent in respect of Investa Technologies s.a.r.l., is registered in India under the Patents Act 1970 - Held that:- If an intangible property right was to refer to a right which is .....

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n intellectual property right for the purpose of taxing the grant of right to use such a right. The question whether such a service could be taxed under a different head is irrelevant and does not arise as there is no such case made out in the notice. - there can be no liability to tax under the head of IPR services in respect of an Intellectual Property Right that is not recognised by the law in India. - Insofar as the agreement with Investa Technologies S.A.R.L. is concerned the same was e .....

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of duty and consequently the extended period of limitation was per se not invokable. - Demand set aside - Decided in favor of assessee. - Appeal No. ST/50/12 - Final Order No. A/88187/2016-WZB/STB - Dated:- 21-6-2016 - MR. M.V. RAVINDRAN, MEMBER (JUDICIAL) AND MR. C.J. MATHEW, MEMBER (TECHNICAL) Shri Vipin Kumar Jain, Advocate And Ms. Shilpa Balani, Advocate, for appellant Shri D. Nagvenkar, Addl. Commr (AR), for respondent ORDER PER: M.V. RAVINDRAN By the impugned order the Respondent has .....

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e right to use/enjoy confidential/technical know-how and patent have been granted, only the patent in respect of Investa Technologies s.a.r.l., is registered in India under the Patents Act 1970. In respect of the remaining agreements, there is no patent, which is registered under the Patents Act, 1970. 3. The Appellant had resisted the demand on the following counts: (a) A perusal of the definition of the terms Intellectual Property Right, and Intellectual Property service as defined in Section .....

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r (ii) permitting the use or enjoyment of, any intellectual property right;] (b) The CBEC has in its Circular No.80/10/2004-ST dated 17.9.2004 clarified that the expressions law for the time being in force, in the context of IPR services mean such laws as are applicable in India. (c). That confidential information/technical know-how (undisclosed information) is undisputedly, not recognised as an IPR and consequently there can be no tax under the head of IPR services in respect of the same. (d). .....

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riod of limitation has rightly been invoked. 5. We have heard the submissions of both sides. The primary issue that arises for determination is whether an Intellectual Property Right, which is not recognised under the Indian laws for the time being in force would constitute an Intellectual Property Right, the temporary transfer or the right to use or enjoyment of which is liable to tax under the head of IPR services. 6. While deciding this we have to bear in mind that India is a signatory to the .....

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provides that once such an application is made and registered in the member country, then the IPR would be protected in that member country. Thus, there appears to be a codified law providing for recognition and Protection under the Indian Laws even in respect of Patents registered overseas. In our view when the legislature has specifically provided that an Intellectual Property Right, that could be taxed as an IPR service is a right to an intangible property, which is recognised under any law f .....

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. There would have been no need for it to qualify the same with a recognition under any law for the time being in force. 7. It would be clearly incongruous to suggest that an intellectual property right such as a patent or a trade mark is not protected or recognised by the Indian Law, yet the grant of the right to use or a temporary transfer of such a patent or trade mark, which is otherwise not recognised in Indian as a Intellectual Property Right would attract liability to service tax under th .....

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uestion whether such a service could be taxed under a different head is irrelevant and does not arise as there is no such case made out in the notice. 8. It is also relevant to note here that if the interpretation suggested by the Respondent to the effect that Intellectual property right even if not recognised in India could still be taxed under the head of IPR services if taken as correct it would lead to the expression under any law for the time being in force being rendered redundant an oti .....

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h were introduced by the Finance (No.2)Bill 2004 has clarified in no uncertain terms that the phrase law for the time being in force implied such laws as are applicable in India and that IPR covered under Indian law in force were alone chargeable to service tax. It was further clarified that IPRs like integrated circuits or undisclosed information, which was not recognised under Indian laws would not be covered under the said taxable services of IPR. We are in complete agreement with this cla .....

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w and as such there cannot be any tax on the same under the head of IPR services, as the same do not qualify as an Intellectual Property Right, the transfer (temporary) or permitting the right to use or enjoyment of which is liable to service tax. 9.1 We also note that a co-ordinate bench of the Tribunal has in the case of TCS vs CST 2016 (41) STR 121 (T) taken a view similar to the one taken by us above. The relevant observations of the Tribunal read as under : 4. The taxable service under cons .....

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marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright. 4.1 Short question to be decided is whether the transfer of technical know how received by the Appellant is a service which may be categorized under Intellectual Property Right Services. We find that the definition of Intellectual Property Right must be satisfied to term the services received by the Appellant as Intellectual Property Right Services. We .....

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fore we find that the technical know-how received by the Appellant and the royalty payment made by the Appellant to Unisys is nowhere established to result from the use of any Intellectual Property Right. 4.2 We may further go on to add that the Intellectual Property Right should be a right under the Indian law. Intellectual Property Right not covered by the Indian laws would not be covered under taxable service in the category of Intellectual Property Right Services. We are fortified in our vie .....

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or the time being in force. As the phrase law for the time being in force implies such laws as are applicable in India, 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. 11. Insofar as the agreement with Investa Technologies S.A.R.L. is concerned the same was entered into on 14.8.2004, prior to IPR services being brought into .....

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he date when the service was rendered and not with reference to the date on which payment is made. The law in this regard is settled by the decision of the CESTAT reported in 2008 (10) STR 243 which was affirmed by the Hon ble Gujarat High Court in the Appellants own case reported in 2010 (19) STR 807 as also by the Hon ble Delhi High Court in the case of CCE vs Consulting Engineering Services India (P) Ltd 2013 (30) STR 586.As the service in the case of Investa Technologies S.A.R.L, was render .....

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