2014 (2) TMI 704 - AT - Service Tax

Stay application - Reverse Charge - Levy of service tax on Intellectual property Rights (IPR) - Trade Mark License Agreement - whether only a registered trademark has a right under any law for the time being in force In India and whether any law other than enacted law In force In India will come within the meaning of any law for the time being in force - Held that - we are not in agreement with the argument of the appellant in view of Section 11(3) of the Trademarks Act, 1999 and Section 27(2) of the said Act in view of the fact that the trademark owner is legally entitled to enforce certain rights against any other person using such trademark even though the trademark Is not registered In India - Applicant directed to make pre deposit of 50% tax - Following decision of AREVA T & D (INDIA) LTD. Versus COMMISSIONER OF C. EX., LTU, CHENNAI 2013 (3) TMI 82 - CESTAT CHENNAI - stay granted partly.

Summary

Issues:
1. Liability of service tax on payment made for using a trademark.
2. Stay petition regarding pre-deposit of tax amount confirmed.

Analysis:

Issue 1: Liability of service tax on payment made for using a trademark
The case involved the applicant being granted rights to use the 'AREVA' trademark on their products and paying license fees to their principals abroad in France. The Revenue contended that service tax should have been paid on such payments under Section 66A of the Finance Act, 1994. A Show Cause Notice was issued for the period between Oct.'10 to Mar.'11, with a total tax demand of Rs.1,97,21,513. The main contention revolved around whether service tax was applicable to these payments. The Tribunal noted that the basic issue in the Show Cause Notice and the adjudication order was the same, leading to the filing of an appeal along with a stay petition.

Issue 2: Stay petition regarding pre-deposit of tax amount confirmed
During the proceedings, the counsel for the applicant referred to a previous Appeal where the Tribunal had passed a Stay Order directing the appellants to make a pre-deposit of 50% of the tax amount confirmed against them. Considering the previous order, the Tribunal directed the applicants to make a pre-deposit of 50% of the confirmed tax amount within eight weeks. The balance dues arising from the impugned order were waived for the admission of the appeal, and its collection was stayed during the pendency of the appeal. This decision aimed to balance the interests of both parties while ensuring compliance with the tax regulations.

In conclusion, the Tribunal addressed the liability of service tax on payments made for using a trademark and the stay petition regarding the pre-deposit of the tax amount confirmed. The decision provided clarity on the tax obligations related to such payments and established a framework for handling pre-deposit requirements in similar cases.