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2017 (9) TMI 1325

lding Switzerland - demand of Service tax on Right to use Technical information - Held that: - identical issue came up before the Tribunal in the case of Reliance Industries Ltd. v. CCE & ST, LTU, Mumbai [2016 (6) TMI 1108 - CESTAT MUMBAI], where it was held that If an intangible property right was to refer to a right which is recognised by any country, then the legislature would not have used the expression under any law for the time being in force. The legislature would have merely stated that an intellectual property right would mean any right to an intangible property. There would have been no need for it to qualify the same with a recognition under any law for the time being in force - appeal allowed - decided in favor of appellant. - Appeal Nos. ST/224/10 & ST/75109/17 - Order No. FO/A/77122-77123/2017 - 29-8-2017 - Dr. Satish Chandra, President And Shri V.Padmanabhan, Member ( Technical ) Shri Ravi Raghavan, Ms.S.Chatterjee, Advocates & Ms. Nivedita Agarwal,C.A. for the Appellant Shri A.Roy, Supdt.(AR) for the Revenue ORDER Per Shri Justice (Dr.) Satish Chandra Both the appeals have been filed against different Orders-in-Original No. 06/COMM/ST/SLG/09-10 dated 25.03.20 .....

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ature of know-how is that it is confidential information which is not put into public domain. The payments made under the Agreement were only for Technical information and know-how received. It is submitted that the technology and know-how shared by SICPA Holding Switzerland with the appellant is confidential information, which is not patented anywhere in the world. It is further submitted that the representation made by the appellant in one of its letters that the technology is patented in Switzerland was on account of bona fide mistake of fact and the appellant humbly confirmed that the technology is nothing but confidential know-how, which is not patented anywhere in the world. 4.3 The contention of the appellant is that the transfer of know-how and technical information does not fall under the category of Intellectual Property service , as defined under Section 65(55b) of the Finance Act, 1994. 4.4 The contention of the appellant is that the definition of taxable service includes only such Intellectual Property Rights that are prescribed under the Indian law for the time being in force. 4.5 The contention is that the transfer of know-how is a transaction in property and not a t .....

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al Excise, Madurai vide Circular No.43/2008 dated 11.09.2008, submitting that the entire exercise is revenue neutral. 4.11 The contention of the appellant is that the service provider is situated outside India and they did not have any office in India. Hence, in view of the decision of the Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI, 2009 (013) STR-0235-Bom., which was later on, upheld by the Hon ble Apex Court, appellant are liable to pay Service Tax before 18.04.2006. 5. Rebutting the contention of the appellant that no liability of service tax arises on the Agreement between appellant and SICPA Holding Switzerland, since the Agreement was for providing technical assistance, the ld.Counsel for the department contended that in view of Article 5 of Technical Collaboration Agreement (page 123 of the Appeal Paper-Book), SICPA Holding Switzerland has granted to the appellant exclusive technical information under all the relevant Patents and in view of that, Royalty of 5 per cent on the net sale of all the products was to be paid. Article 7 of the said Agreement clearly states that the licensee will be given right to Patents in India in respe .....

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ation Treaty, was signed by member countries, the same has been embodied in Chapter XXII of the Patents Act, 1970. The said treaty spells out a detailed mechanism for the filing of international applications by an inventor and 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 for the time being in force, obviously the law being referred to here has to be an Indian Law and not the recognition of the intangible property right under the law of a third country. If an intangible property right was to refer to a right which is recognised by any country, then the legislature would not have used the expression under any law for the time being in force . The legislature would have merely stated that an Intellectual Property Right would mean any righ .....

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; S. Tax, Mumbai - 2016-TIOL-1654-CESTAT-MUM = 2016 (44) S.T.R. 82 (Tri.) [para 2]. 7. It has been held that to be categorized for service tax purpose under IPR, such right should have been registered with trade mark/patent authority. In the present case, admittedly, there is no right recognized as IPR under any law for the time being in force in India. As such, there can be no provision of IPR service for tax liability on reverse charge basis. 8. In view of the settled legal position as held in various decisions of the Tribunal discussed above, we find that impugned order is without merits and accordingly set aside the same. The appeal is allowed. 8. During the course of argument, ld.Counsel for the department has submitted that the matter has reached to the Supreme Court in the case of Commissioner v. Reliance Industries Ltd. [2017 (51) S.T.R. J187 (SC)], where the appeal has been admitted, but no stay had been granted. 9. In the light of the above discussion, we have no option except to follow our earlier decision (supra). Hence, by following our earlier order, we set aside the impugned orders and allow the appeals. In the result both the appeals are allowed. ( Pronounced and di .....

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