TMI Blog2023 (6) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... and Intellectual Property rights covered under Indian law in force alone are chargeable to service tax and Intellectual Property Rights like Integrated Circuits or Undisclosed Information would not cover under the taxable services. Admittedly, Trade Mark rights which have been used by the appellant-assessee are not registered in India, therefore, the same are not liable to tax under IPR service. After taking into consideration, the ratios of various decisions and also the Circular dated 17.09.2004, it is held that the appellant assessee is not liable to pay service tax under IPR service, under Section 65 (105) (zzr) of the Finance Act, 1994. Further, it is found that the findings in the impugned order holding that deduction under Notification No. 17/2004-ST dated 10.09.2004 is available only to service tax paid under Section 66 and not as reverse charge under Section 66A is also contrary to the decision of the Tribunal in the case of M/S ROCHEM SEPARATION SYSTEMS (INDIA) PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2015 (1) TMI 1052 - CESTAT MUMBAI] . Extended period of limitation - HELD THAT:- The extended period cannot be invoked as the appellant-assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, two show cause notices were issued for non-payment of service tax under Section 66A of the Finance Act, 1994 on royalty amount paid to France based company (service provider) for transfer of technical know-how falling under Intellectual Property Rights Service. Show cause notice dated 13.07.2010 was issued invoking extended period of limitation for demand of service tax including cess for Rs. 3,12,68,932/- , Show Cause Notice dated 13.04.2012 for Rs. 3,08,63,630/- and provisions of interest penalty also invoked. The appellant-assessee filed detailed reply to the show cause notices and also cited various decisions in support of their submissions. 3. After following due process, the Ld. Commissioner of Central Excise confirmed total demand of Rs. 5,33,80,931/- for both the periods as shown in the table above, but granted cum-tax benefit to the appellant-assessee for which the department has filed Appeal No. ST/55525/2013. 4. Heard both the parties and carefully perused the case records. 5. Ld. Counsel for the assessee submitted that the impugned order is not sustainable in law as the same has been passed without properly considering the facts and the law and the binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not as reverse charge under Section 66A. She further submitted that this finding is contrary to the decision of the Tribunal in the case of M/s Rochem Separation Systems (India) P. Ltd. v. CST 2015 (39) STR 112 (T) wherein it has been inter alia observed as under:- 10. The Commissioner has rejected the benefit of Notification No. 17/2004 for the reason that the notification applies only to Section 66 and not to Section 66A in which the appellant is required to pay service tax on the import of services or reverse charge basis. The Commissioner s further reasoning is that the appellant is only a deemed provider of service under Section 66A(1)(b) and cannot be treated as one who provided the service. This reasoning is flawed Section 66A was introduced by Finance Act, 2006 w.e.f. 18-4-2006 whereas the Notification No 17/2004 was issued on 10-9-2004. It appears that the law makers slipped on bringing an amendment to the notification because the intention of the notification is very clear, that is, not to levy service tax on cess paid towards the import of technology. Careful reading of the notification indicates that what is exempted is taxable service provided by the holder of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CCE 2005 (188) ELT 149 (SC) (ii) Padmini Products v. CCE 1989 (43) ELT 195 (SC) 11. She also submits that the entire proceedings are revenue neutral as undoubtedly the appellant is entitled to credit of any such service tax payable under Section 66A of the Act. For this submission, she relied on the following decisions:- i. Nirlon Ltd. v. CCE 2015 (320) ELT 22 (SC) ii. CCE v. Tenneco RC India Pvt. Ltd. 2015 (323) ELT 299 (Mad) iii. CCE v. Gujarat Glass Pvt. Ltd. 2013 (290) ELT 538 (Guj) 12. She further submitted that the appellant had bonafide belief that no service tax is payable on acquisition of know-how and has also acted on the basis of a legal opinion that no service tax was payable on the amount paid by it. 13. She further submitted that the extended period cannot be invoked and penalty cannot be imposed when bonafide belief exists and interpretation issues are involved. For this submission, she relied upon the following decisions:- (i) CCE v. Kolety Gum Industries 2016 (335) ELT 581 (SC) (ii) Jayant Juneja v. CCE 2015 (326) ELT 634 (SC) (iii) CC v. Reliance Industries Ltd. 2015 (325) ELT 223 (SC) 14. With regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and after perusal of the decisions relied upon by both the parties, we find that admittedly Intellectual Property Rights (IPR) such as potents, copyrights, trademarks and designs have not been registered in India under Indian Law. Hence a question arises whether the royalty paid by the appellant-assessee under the agreement is liable to service tax under IPR Service or not. Before, we answer this question, it is pertinent to reproduce the relevant definition of IPR which is as under:- Section 65. Definition In this Chapter, unless the context, otherwise requires:- (55) (a) intellectual property right means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright; (55) (b) intellectual property service means, (a) transferring, {temporarily} whether permanently or otherwise; or (b) permitting the use or enjoyment of, any intellectual property right. (105) taxable service means any service provided or to be provided- (zzr) to any person, by the holder of intellectually property right, in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, the same will not attract the service tax, demand under reverse charge mechanism, is the ratio. We find that the said ratio is squarely applicable in these appeals post 18-4-2006. The same view has been expressed by the Tribunal in the case of Chambal Fertilizers and Chemicals Ltd. and Munjal Showa Ltd. (supra). Since the issue is no more res integra, we hold that the impugned orders are unsustainable and liable to be set aside and we do so. (ii) Munjal Showa Ltd. v. CCE 2017 (5) G.S.T.L. 145 (Tri. - Chan.) 7. On going through the said provisions of the Act, we find that, to tax under service tax, under Intellectual Property Rights, such rights should be registered with Trademark/Patent authorities. It is a fact on record that such trade mark is not registered in India. Moreover, the C.B.E. C. Circular dated 17-9-2004 relied upon by the ld. AR is having no help to the Revenue as it has been clarified that the taxable service include only such Intellectual Property Rights except Copyright that are prescribed under the law for the time being in force, as the term time being in force implies that, as are applicable in India, and Intellectual Property rights cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 21. Further, we find that the findings in the impugned order holding that deduction under Notification No. 17/2004-ST dated 10.09.2004 is available only to service tax paid under Section 66 and not as reverse charge under Section 66A is also contrary to the decision of the Tribunal in the case of Rochem Separation Systems (india) Pvt. Ltd. cited (supra). 22. Further, in these circumstances, extended period cannot be invoked as the appellant-assessee has a bonafide belief that they are not liable to pay service tax on acquisition of know-how. Moreover, the issue relates to interpretation and hence intention to evade tax cannot be inferred as held in various decisions cited (supra). Further, the extended period cannot be invoked as the entire proceedings are revenue neutral as held by the Tribunal in the cases cited (supra). 23. Further, considering preliminary objection raised by the Revenue that the present appeal may be kept in abeyance till the decision of the Hon ble Apex Court, we do not find any force in this preliminary submission in view of the various decisions cited by the appellant - assessee wherein it has been held that mere filing of appeal is not a ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on a similar issue. In these circumstances, the prayer of the Ld. SDR, to keep the appeal pending, cannot be conceded to. Other decisions relied upon by the appellant-assessee on this issue are cited herein below:- (i) R. K. Texcon vs. Union of India-2005 (192) ELT 47 (Raj.) (ii) National Aluminium Company Ltd. vs. Commissioner of Customs (Preventive) -2019 (23) GSTL 161 (S.C.). 24. Further, as far as the appeal filed by the Revenue is concerned wherein the department has only challenged the cum-tax benefit given by the Ld. Commissioner to the appellant-assessee, we find that this issue is well settled by the decision of the Tribunal in the case of DHL Express (I) Pvt. Ltd. cited (supra) holding that even in reverse charge scenario cum-tax benefit is available to the assessee by observing as under:- 2.14.1 The appellants argued that Service tax demand under reverse charge, even if applicable, would be revenue neutral. The appellants have claimed the benefit of cum-tax price. They have claimed that if the consideration received form DHLI is indeed treated as consideration for services provided by them to DHLI then that amount may be treated as Cum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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