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TMI Blog2018 (11) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... USA which in fact an expansion of an earlier Technology License agreement dated March 20, 1990 (hereinafter "the old contract") entered between the same two parties. As per agreement appellant desires to acquire license to manufacture products manufactured with the use of Timken (USA)'s proprietary technical information and to service the products by using Timken (USA)'s proprietary technical information. In the new contract appellant intends to expand the part number ranges over the original 50 part numbers envisaged in the old contract. The terms in the new contract and also in the old contract are more or less same. As per contract, appellant agrees to pay to Timken (USA) compensation for license of technical information. 2. In all sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved; (ii) the franchisor provides concepts of business operation to franchisee, including knowhow, method of operation, managerial expertise, marketing technique or training and standards of quality control except passing on the ownership of all knowhow to franchisee; (iii) the franchisee is required to pay to the franchisor, directly or indirectly, a fee; and (iv) the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person For that the Technology License and Technical Assistance Agreement entered into by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified with franchisor and the same may or may not involve a trade mark, which would mean that usage of trade mark per se is not covered but the right to represent franchisor whether or not by way of a trade mark, service mark or any such symbol is covered under the taxable category of franchise service. In the appellant's case there is no such right granted to the appellant to represent Timken, USA and thus the usage of trade mark will not be taxable under the heading Franchise Service but will be taxable under the category of Intellectual Property Right Services. 7. We have also heard the learned Departmental Representative who has reiterated the findings of the order-inoriginal. 8. Having hard both the sides before proceeding further t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the contract which has given the legal right to the appellant for manufacture the products with the brand name of Timken are as follows :- " * The products manufactured and sold by the appellant are identified with Timken, USA . The services provided are also identified with Timken, USA since those are provided with the use of Timken, USA's proprietary technical information. * Products are known in the market as "TIMKEN" brand product, not by the name of manufacturer, i.e., the appellant. * ˚ The style of presentation of goods and services and any applications for protection thereof are also included under Intellectual property transferred to the appellant. Therefore, sale and marketing of the products are guided by Timken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents which are there in the contract, we find that the services availed by the appellant are more akin to franchise services rather than intellectual property right service. While holding the above view, we also refer to the Hon'ble Delhi High Court judgment in the case of Delhi International Airport P. Ltd. vs. Union of India - 2017 (50) S.T.R. 275 (Del.). The relevant extract of this judgment is reproduced below :- "57. The term "representational right" would necessarily qualify all the three possibilities i.e., (i) to sell or manufacture goods, (ii) to provide service, and (iii) undertake any process identified with the franchisor. 58. A representational right would mean that a right is available with the franchisee to represent the fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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