2014 (7) TMI 821 - AT - Service Tax

Waiver of pre-deposit - Intellectual property rights - Purchase of trademark of foreign company under permission obtained from RBI - Held that - appellant has made out a prima facie case against the impugned demand - It was found that there was no actual purchase of brand. This finding was recorded after a reading of the Deed of Transaction dated 12-9-2006, which we have also perused. The recitals of that document prima facie indicate absolute transfer of trademarks and Foster s Brand Intellectual Property from the foreign company to the assessee. It is also on record that the appellant qua owner of the trademarks obtained registration in India under the Trademarks Act. It is also on record that they paid stamp duty on the entire consideration paid by the appellant-company for purchase of trademarks. The RBI s permission was also for such purchase of the trademarks. Thus the documentary evidence in this case is abundantly in support of the appellant s case. Hence there will be waiver of pre-deposit and stay of recovery in respect of the adjudged dues - Stay granted.

Summary

Issues:
1. Waiver and stay of adjudged dues including Service tax and Education Cess for the month of November, 2006 under the head 'Intellectual Property Service'.
2. Interpretation of the transaction between the appellant and "Foster's Australia" for trademarks and Foster's Brand Intellectual Property.
3. Examination of the prima facie case against the impugned levy based on documentary evidence and legal provisions.

Analysis:
1. The appellant sought waiver and stay of over Rs. 20 crores demanded as Service tax and Education Cess for November 2006 related to 'Intellectual Property Service'. The amount paid to "Foster's Australia" was USD 35 million for trademarks and brand intellectual property. The appellant claimed the payment was for the purchase of rights, title, and interest in the trademarks for the Indian territory, asserting it was a sale of goods, not a service. The appellant obtained trademark registration in India, paid stamp duty, and had RBI permission for the transaction, supporting their case against the levy.

2. The Tribunal reviewed the transaction deed of 12-9-2006 and found prima facie evidence of the absolute transfer of trademarks and brand intellectual property from "Foster's Australia" to the appellant. The appellant's trademark registration in India, payment of stamp duty, and RBI permission further supported the transfer of ownership. The Tribunal disagreed with the adjudicating authority's finding of no actual purchase of the brand, emphasizing the documentary evidence in favor of the appellant's case. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery for the adjudged dues.

3. The Tribunal considered the appellant's strong prima facie case against the impugned demand, highlighting the incorrect finding of the adjudicating authority regarding the brand purchase. The documentary evidence, including the transaction deed, trademark registration, stamp duty payment, and RBI permission, supported the appellant's position of absolute ownership of the trademarks. The Tribunal's decision was based on the convincing documentary evidence and legal provisions, leading to the grant of waiver and stay for the adjudged dues related to the 'Intellectual Property Service' transaction.