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2016 (10) TMI 619 - CESTAT MUMBAI

2016 (10) TMI 619 - CESTAT MUMBAI - 2017 (47) S.T.R. 179 (Tri. - Mumbai) - Import of services - reverse charge method - ‘information technology service’ or ‘intellectual property service’ - classification of services - period from 10th September 2004 to 31st March 2007 - transfer of technology against payment based on downloads made by subscribers of the appellant using the service of the provider - involvement of copyright - Reverse Charge Mechanism - rule 2(1)(d)(iv) of Service Tax Rules, 1994 .....

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April 2006 does not have the authority of law. - Demand for the period after 18-4-2006 - Section 65(105)(zzr) - section 65(55a) - copyright outside the scope of ‘intellectual property service’ - Held that: - Section 65(105)(zzr) has been invoked in the notice but the nature of ‘technical knowhow’ transferred to appellant from among trade mark, design, patent etc. has not been identified. Likewise, it has not been established if the said ‘intellectual property right’ was acknowledged under t .....

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Mr. C.J. Mathew, Member (Technical) Shri Prasad Paranjape, Advocate, for appellant Shri D. Nagvenkar, Additional Commissioner (AR), for respondent ORDER This appeal by M/s. Tata Teleservices Ltd. arises from order-in-original no. 75/BR-75/ST/Th-I/2011 dated 4th November 2011 of Commissioner of Central Excise, Thane-I confirming demand of ₹ 2,03,95,756/- as provider of intellectual property service taxable under section 65(105)(zzr) of Finance Act, 1994 for the period from 10th September 20 .....

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appellant that they are in receipt of information technology service and held that the service rendered is that of intellectual property service as it was technology that was transferred against payment based on downloads made by subscribers of the appellant using the service of the provider. Reliance was placed on the decision of the Tribunal in Araco Corporation v. Commissioner of Central Excise [2005 1 STT 116 (CESTAT)] holding that transfer of technical knowhow is in the nature of rendering .....

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. It is his contention that the Hon ble Supreme Court has, in Union of India v. Indian National Shipowners Association [2010 (17) STR J57 (SC)], affirmed the decision of the Hon ble High Court of Bombay that service tax liability on provision of service from abroad would not devolve on their being rendered to Indian entity prior to 18th April 2006 as section 66A of Finance Act, 1994 was brought into force only then. The levy of tax on receipt of intellectual property right service is challenged .....

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41) STR 121 (Tri.-Mumbai)] and the failure of the show cause notice to identify the specifics of technical knowhow being transferred. 4. Learned Authorized Departmental Representative reiterated the contentions in the impugned order to justify the confirmation of demand and the imposition of penalties. 5. Demand of tax on the payments effected by appellant to service provider from abroad for facilities used in rendering service to their customer has been confirmed as payable under reverse charge .....

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in Indian National Shipowners Association v. Union of India [2009 (13) STR 235 (Bom.)], affirmed by the Hon ble Supreme Court in dismissing appeal of Revenue, appears to have been lost sight of. In the said judgment, it was held that:- That question has been decided by the Supreme Court by its judgment in the case of Laghu Udyog Bharati (supra) and the Supreme Court has clearly laid down that the imposition of the service tax is on the persons rendering the services and by making a provision in .....

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to levy service tax on the recipients of the taxable service. Now, because of the enactment of Section 66A, a person who is resident in India or business in India becomes liable to be levied service tax when he receives service outside India from a person who is non-resident or is from outside India. Before enactment of Section 66A it is apparent that there was no authority vested by law in the Respondents to levy service tax on a person who is resident in India, but who receives services outsi .....

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ty to levy service tax on the members of the Petitioners-association. This decision, dealing on it does, with the specific issue of reverse charge liability to tax, the demand relating to the period prior to 18th April 2006 does not have the authority of law. 6. Section 65(105)(zzr) has been invoked in the notice but the nature of technical knowhow transferred to appellant from among trade mark, design, patent etc. has not been identified. Likewise, it has not been established if the said intell .....

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the services received by the appellant as Intellectual Property Right Services. We find no clue at all in the records as to which type of Intellectual Property Right is being assigned to the Technical know-how received by the appellant. It is obvious from the definition of Intellectual Property Right that the right has to be a specific Right under a specific Law. Examples are given under the definition such as the Trade Mark which is a right provided under Trade Marks Act . Similarly the right .....

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