TMI Blog2019 (11) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... 06, there was no authority to levy service tax on Import of service - thus, no service tax can be fastened to the appellants before 18.4.2006. Accordingly, it is to be held that the appellants are liable to pay service tax of ₹ 48,76,268/- for the period April 2006 to March 2007 - decided against Revenue. Classification of services - technical knowhow received from their related foreign entity for the period 16th August 2002 to 31st March 2007 - demand of service tax, however, the demand on the same was under the heading Consulting Engineering Services for the period 16.8.2002 to 9.9.2004 for an amount of ₹ 92,74,747/- and under Intellectual Property Services for the period 10.9.2004 to 31.3.2007 - HELD THAT:- The payments are made for technical knowhow, training, etc., and not for the use of logo. Though, the use of logo is permitted in terms of the agreement unless a specific payment is made for the same, it cannot be said that the appellants have availed any trademark in terms of the service tax law - reliance placed in the case of ABB LTD VERSUS C.C.E. S.T. -BANGALORE-LTU [ 2019 (1) TMI 1037 - CESTAT BANGALORE] where it was held that Know-how is not recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2002 to 31.3.2006 (out of ₹ 80,65,503/-) and service tax of ₹ 48,76,268/- was deposited for the period 1.4.2006 to 31.3.2007 (out of ₹ 65,94,694/-). He submits that in view of the judgment of the Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI: 2009 (13) STR 235 [affirmed by Supreme Court 2010 (17) STR J57 (SC)] import of services are taxable in India only with effect from April 18, 2006 i.e., the date on which Section 66A was inserted in the Finance Act. The decision has been followed by Karnataka High Court and the Tribunal in the cases of CST vs. Toyoda Iron Works: 2010 (19) STR 802 (Kar.) and M/s. BHEL-Gs Turbine Services Pvt. Ltd. vs. CST, Hyderabad: 2010 (20) STR 679 (Tri.-Bang.). 3. Learned AR for the Department has reiterated the impugned order. He submits that there is no dispute regarding the receipt of taxable services from the foreign service provider; Section 68(2) of the Finance Act, 1994 empowers Central Government to specify the manner of payment and liability of persons to make payment; Rule 2 (1) (d)(iv) with effect from 16.8.2002 mandates the manner and mode of payment of service tax; and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1037-CESTAT-Bangalore) held that Technical Knowhow is not recognised as Intellectual Property under Indian Laws and therefore such knowhow received by the appellants is not within the purview of Intellectual Property Services . 7. The learned AR for the Department has reiterated the findings of Orders-in-Original and submitted that as observed by the Commissioner in the impugned orders, the appellants are using the logo of the parent company and as such, the same should be treated as Intellectual Property Services availed. Learned counsel for the appellants in a rejoinder submits that in terms of the agreement the transfer of knowhow is in terms of para 4 and 5 of the agreement and the use of trademark and logo, etc., is as per para 10 of the agreement. However, in terms of the exhibit 4 to the agreement, payment is only in respect of technical knowhow, training and technical assistance and royalty and not in respect of use of logo. Therefore, the argument on the use of logo has no relevance to the issue. He further submits that in view of the case of ABB Ltd. (supra), the service tax cannot be demanded on Intellectual Property Services. He relies upon the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.3 In case of bankruptcy etc., of LM India the right to use the aforesaid trademarks and trade names repeals. 9.1 On going through the above, it is clear that the payments are made for technical knowhow, training, etc., and not for the use of logo. Though, the use of logo is permitted in terms of the agreement unless a specific payment is made for the same, it cannot be said that the appellants have availed any trademark in terms of the service tax law. We find that this Bench in the case of ABB Ltd. (supra) have held that : 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 fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related intellectual property right. It is pertinent to note that the Department has issued a clarification vide F.No. B2/8/2004-TRU, dated 10-9-2004 to clarify the scope of service which is reproduced herein below :- 9. Intellectual property services (other than copyrights) : 9.1 Intellectual property emerges from application of intellect, which may be in the form of an invention, design, product, process, 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant for the period prior to 18-4-2006 by relying on the decision in the case of Indian National Ship Owners Association cited supra and remand the matter to the adjudicating authority for passing an order with respect to the demand for the period after 18-4-2006 on the issue of taxability of technical know-how under Intellectual Property Rights service and the Commissioner of Central Tax, Bangalore vide de novo Order-in-Original No. 3/2017-18, dated 29-12-2017, dropped the demand on the technical know-how services even for the period after 18-4-2006 as the same does not fall under the service viz. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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