2014 (1) TMI 1043 - AT - Service Tax

Intellectual property service - Scientific or technical consultancy services - Held that - Service tax under scientific or technical consultancy services is attracted in a situation when the property is temporarily transferred to another person for a consideration - From the definition of scientific or technical consultancy services that there should be an advice given by person or an institution to another person. In the present case temporary transfer of some intellectual property or permitting its use. In the present case there does not seem to be any temporary transfer of intellectual property. The appellant has, therefore, made out a prima facie case that the services alleged to have been provided by them are probably not attracted. The appellant has, therefore made out of a strong case for complete waiver of the service tax liability fastened upon them - Stay granted.

Summary

Issues:
Interpretation of the definition of scientific or technical consultancy services and intellectual property service under the Finance Act, 1994 in the context of a sale and purchase agreement involving transfer of intellectual property rights.

Analysis:
The case involved a stay application filed against an Order-in-Original regarding duty liability under intellectual property service and scientific or technical consultancy services. The appellant had entered into a sale and purchase agreement for the transfer of intellectual property rights as a going concern. The Revenue contended that the appellant was required to discharge duty liability under the mentioned services.

The arguments presented by both sides focused on the interpretation of the definition of scientific or technical consultancy services. The consultant of the appellant argued that service tax liability arises only in cases of temporary transfer of intellectual property rights and that no service tax was attracted in this case as the entire assets were sold without any advice being rendered. On the other hand, the Revenue maintained the position taken by the adjudicating authority.

After considering the arguments, it was observed that service tax under scientific or technical consultancy services is attracted when intellectual property is temporarily transferred for a consideration. The definitions of scientific or technical consultancy services and intellectual property service under the Finance Act, 1994 were crucial in this analysis. The definition of scientific or technical consultancy services required advice to be given, which was not demonstrated in this case. Similarly, intellectual property service was deemed to be rendered only through temporary transfer or permitting use, which did not seem to have occurred in this situation.

The Tribunal found that the appellant had made a prima facie case that the alleged services provided were not attracted under the defined services. Consequently, a strong case for complete waiver of the service tax liability was established, leading to the grant of a stay against the confirmed dues/penalties until the appeal's disposal. The judgment was pronounced on 3-5-2013 by the Tribunal comprising Shri M.V. Ravindran, Member (J), and H.K. Thakur, Member (T).