TMI Blog2019 (1) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... - Though the appellant had challenged the same but during the course of argument, the learned counsel for the appellant submitted that they are not challenging the same. Commercial training or coaching service rendered outside India - Held that:- The seminar was exclusively conducted outside India. Further, it is found that appellant has also attached the copies of the certificates showing the payment for the seminar which were conducted outside the country. In view of these facts, it can be said that since training and coaching service happened outside India, the appellants were not liable to pay service tax as the same is excluded from the ambit of Rule 3(1)(ii) of the Rules. Extended period of limitation - penalty - Held that:- The Department has invoked the extended period of limitation as the period of dispute relates to January 2007 to December 2007 but the show-cause notice was issued on 20/10/2008 - the Department was aware of all the payments made by the appellant to their foreign companies for transfer of technical knowhow which came to the knowledge of the Department in July 2005 itself and show-cause notice was issued - further, in the present case, the demand is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al services and the appellant make the payments against such bills in foreign currency. Appellant received the above services for the period January 2007 to December 2007 and paid an amount in aggregate of ₹ 1,47,34,46,000/- to the foreign companies. The appellants have remitted service tax including education cess aggregating to ₹ 7,73,18,489/- during the period January 2007 to December 2007. The bifurcation of the taxable amount on which service tax is alleged to be payable in the present case are given herein below: - Balance taxable amount on which service tax payable Value Service tax + Education cess Category of service as per the SCN 15,69,840 1,94,032 Commercial Training or Coaching service 19,51,89,054 2,41,39,087 2,27,53,375 Others 13,85,712 Technical testing and Analysis Service 50,87,86,000 6,28,85,950 Intellectual Property Rights Service 70,55,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show-cause notice but the appellants are contesting the liability of service tax on the following: - i. Demand of service under the category of Intellectual Property Right service on transfer of technical know-how. ii. Demand of service tax on the activity of technical testing and analysis rendered outside India. iii. Demand of service tax on commercial training or coaching service rendered outside India. 5.2. Learned counsel in their written submissions have also stated that the appellants are not contesting the demand of service tax of ₹ 2,27,53,375/- pertaining to various other categories of services. 5.3. He further submitted that, with regard to demand of service tax on intellectual property right is concerned, the appellant during the impugned period, has paid royalty / license fee to M/s. ABB Technology Ltd., Zurich Switzerland towards receipt of technical know-how which is quantified as a percentage of the Net Sales Turnover of the goods manufactured by the appellants from the licensed technology and cleared by them. he further submitted that the Department has wrongly the demand under the category of Intellectual Property Right service by treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune [2014(36) STR 318 (Tri. Mum.)] 5.4. He also placed reliance on the decision of the CESTAT in their own case vide Final Order No.20183/2016 dt. 02/02/2016 wherein the issue related to demand of service tax on the technical know-how received by the appellants even for the period after 18/04/2006 and the CESTAT allowed the appeal of the appellant for the period prior to 18/04/2006 by relying on the decision in the case of Indian National Ship Owners Association Vs. UOI [2009(13) STR 235 (Bom.)] and the matter was remanded to the adjudicating authority for passing an order with respect to the demand for the period after 18/04/2006 on the issue of taxability of technical know-how under Intellectual Property Right service and the Commissioner of Service Tax vide de-novo order No.3/2017 dt. 29/12/2017 has dropped the demand on the technical know-how services even for the period after 18/04/2006 as the same does not fall under the taxable service viz. Intellectual Property Right service. The learned counsel prayed that in view of the appellants' own case and other cases relied upon by them, the demand of service tax of ₹ 6,28,85,949/- confirmed in the impugned order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the facts and circumstances, the penalty imposable is not sustainable. 6. On the other hand the learned AR defended the impugned order. 7.1. After considering the submissions of both the parties and perusal of the material on record, we find that the appellants have paid the royalty / license fee to M/s. ABB Technology Ltd., Zurich, Switzerland towards the receipt of technical know-how and as per the licence agreement, the foreign companies are making available to the appellant knowledge by means of data, experience, for the purpose of manufacture, sale and use of the contract product and the providing of know-how is not a service which is taxable under the category of Intellectual Property Right service. Further in order to find whether the service rendered by the foreign companies to the appellant falling under the definition of Intellectual Property Right service, we would like to refer to the definition of Intellectual Property Right and the corresponding taxable service concerning Intellectual Property viz. Intellectual Property service as defined in the Finance Act, 1994. These definitions are given below: - 6.5.1 Intellectual Property Right as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for 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. 9.2. A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs. 9.3. In case a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the cess amount so paid would be deductible from the total service tax payable (ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand on the technical know-how services even for the period after 18/04/2006 as the same does not fall under the service vidz. Intellectual Property Right service. Further we find that in various decisions relied upon by the appellant cited supra, this issue is no more res integra and has been settled by various decisions of the Tribunal that there cannot be any service tax on technical know-how. Therefore this issue is decided in favour of the appellant and the demand of service tax to the tune of ₹ 6,28,85,949/- is set aside. Further as far as technical testing and analysis services are concerned, though the appellant had challenged the same but during the course of argument, the learned counsel for the appellant submitted that they are not challenging the same. Further as far as commercial training or coaching services are concerned, the learned counsel submitted that the appellant had made the payment to M/s. ABB Technology Ltd. Zurich, Switzerland in connection with the participation of the employees of the appellants in a seminar conducted by the foreign company at a place outside India. Appellant has also submitted that 4 of their employees attended IMD Finance Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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