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Issues involved: Interpretation of service tax liability on transactions involving trademarks and intellectual property rights.
Summary: The Appellate Tribunal CESTAT, New Delhi, in the case, decided to dispose of the appeal after considering a stay application, without the need for pre-deposit. The appellant, a manufacturer of medicines, had entered into agreements for patents, trademarks, and brand names, allowing other manufacturers to produce medicines under its trademarks. The Revenue authorities had directed the appellant to pay service tax on the receipts under these agreements, considering the relationship as that of a "Consulting Engineer" to a client. The appellant contended that trademarks are property, and the right to use a trademark is a transaction in property, not consultancy. They cited judicial decisions, including the Bombay High Court case of Commissioner of Sales Tax v. Duke & Sons Pvt. Ltd., to support their argument that trademarks are goods, and a license to use a trademark is a right to use property, akin to a transaction of sale. The Tribunal agreed with the appellant, stating that no consultancy or advice is involved in the leasing or sale of trademarks. It clarified that the grant of the right to use a trademark is a transaction in intangible property, not consultancy. Therefore, the impugned order demanding service tax after treating the grant of the right to use a trademark as consultancy was erroneous. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief due to the appellants.
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