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M/s. H & M Hennes & Mauritz Retail Private Limited Versus Commissioner of Service Tax

2016 (9) TMI 491 - AUTHORITY FOR ADVANCE RULINGS

Service tax liability - Whether the Trade Mark/ License Fee and the payment made in terms of the foreign collaboration agreement by the applicant to H&M GBC is liable to Service Tax in terms of the Finance Act, 1994 - Held that:- the applicant has entered into Trademark License Agreement with M/s H & M Hennes & Muritz GBC AB, Sweden to use the trademark rights and other intangible property rights and required to pay the License Fee. All intellectual property rights and other rights, including wi .....

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d Business Support Agreement will be covered in the definition of “service’ under Section 65B (44) of the Finance Act, 1994. Section 68 (2) provides that in respect of such taxable service as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed. Therefore, in terms of above Section 68(2) read with Notification No.30/2012-St dated 20.06.2012, taxable services provided or agreed to be provide .....

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. AAR/ST/20/2016, Application No. AAR/44/ST/12/2014 - Dated:- 15-7-2016 - V.S. Sirpurkar (Chairman), Shri S.S.Rana (Member) And Shri R.S.Shukla (Member) For the Applicant : Shri Tarun Gulati, Advocate For the Department : Shri Amresh Jain, Authorised Representative (AR) RULING M/s H & M Hennes & Mauritz Retail Pvt. Ltd (hereinafter also referred to as applicant) is an Indian wholly owned subsidiary comprising of M/s H&M Hennes & Mauritz GBC AB, Sweden ( H&M GBC ) holding 99% .....

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mpany of the H&M group of related entities. H&M AB currently operates as the centralized administrative entity of the global H&M operation and is the owner of all H&M intellectual property related to the H&M brand and trademarks. H&M AB‟s main responsibilities include the development of the overall strategic direction of the H&M Group and the maintenance and ownership of the H&M brand and trademarks. H&M AB has granted global exclusive rights to H&M .....

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tore design, management, finance, strategy, and sales. H&M GBC holds all intellectual property, e.g., operational know-how, associated with these activities. 2. Applicant proposes to procure and import into India, said goods from independent overseas third party manufacturers at an agreed price. The said goods will be procured by the applicant on a principal to principal basis (from the third party manufacturers) and the goods will be imported into India in the name of the applicant only for .....

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nt has entered into three separate Agreements with H&M GBC, which are explained hereunder:- a. Foreign Collaboration and Sub-License Agreement: Applicant has entered into a Foreign Collaboration and Sub-License Agreement with H&M GBC dated 01.04.2014 for obtaining rights to exploit H&M‟ brand for sale of goods in India. The consideration for this agreement will form part of the Trademark License Agreement and a consolidated consideration will be paid by the applicant to H&M .....

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C as 1% of the total sales made by the applicant. c. Sales and Business Support Agreement: In lieu of the functions performed by H&M GBC towards overall market strategy, store location, store designing and concept, sales as well as for the entrepreneurial risk assumed, the applicant will pay a Sales and Business Support fee to H&M GBC in terms of the Sales and Business Support Agreement. 4. As regards the said goods proposed to be imported by the applicant, the applicant would place a pu .....

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facturers will be the sole consideration paid for the said goods and apart from the payment in terms of the said invoices, no other payment will be made by the applicant or by anybody else on behalf of the applicant to the said third party manufacturers for the said goods. 5. Applicant has raised following questions for rulings by this Authority in terms of Finance Act, 1994; A. Whether the Trade Mark/ License Fee and the payment made in terms of the foreign collaboration agreement by the applic .....

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The applicant is required to pay the License Fee subject to its earning at arm‟s length target margin for using of Trademark. All intellectual property (IP) rights and other rights, including, without limitation-patents, design rights, trademarks, copyright and know-how, relating to the IP shall all times be the exclusive property of H & M GBC. Service as per Section 65B (44) of the Finance Act, 1994 inter-alia means any activity carried out by any person for another for consideration .....

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id by such person and in such manner as may be prescribed at the rate specified in section 66. Further, in terms of Section 68(2) of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012, any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory, service tax is payable by the person receiving the service. The applicant has entered into Trademark License Agreemen .....

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