2015 (12) TMI 1270 - HC - Service Tax

Validity of Tribunal s order - Intellectual Property Right service - Penalty u/s 77 & 78 - Held that - Tribunal on prima facie of the agreement dated 20.12.2006, came to the conclusion that there was a strong prima facie case in favour of the assessee as there was permanent transfer of intangible goods from the Swedish entity to the assessee and, thus, transaction falls outside the scope of Section 65(55b)(a) of the 1994 Act. Thus, the Tribunal finding strong prima facie case in favour of the assessee granted waiver of pre-deposit in full and stayed all further proceedings for realization of the adjudicated liability during the pendency of the appeal. The appeal before the Tribunal raises a debatable issue - No illegality or perversity could be pointed out by the learned counsel for the appellant in the findings recorded by the Tribunal which may warrant interference by this Court. Accordingly, no substantial question of law arises in this appeal - Decided against Revenue.

Summary

Issues:
1. Interpretation of Section 35-F of the Central Excise Act, 1944 regarding pre-deposit requirements.
2. Proper exercise of discretion by the Tribunal in granting waiver of pre-deposit.
3. Determination of whether the service/transaction falls under Section 65(55b)(a) of the Finance Act, 1994.

Analysis:
1. The appeal was filed by the revenue under Section 35G of the Central Excise Act, 1944 against the Tribunal's order. The Tribunal had granted full waiver of pre-deposit, which was challenged by the revenue. The Tribunal concluded that no pre-deposit was required, based on the interpretation of Section 35-F of the Act. The Court upheld the Tribunal's decision, finding no merit in the revenue's appeal.

2. The revenue contended that the Tribunal granted unconditional stay without safeguarding the revenue's interest and incorrectly held that the service/transaction did not fall under Section 65(55b)(a) of the Finance Act, 1994 during the waiver of pre-deposit. However, the Court found no merit in the revenue's arguments. The Tribunal had considered the agreement between the parties and found a strong prima facie case in favor of the assessee, leading to the grant of full waiver of pre-deposit.

3. The Tribunal's decision to grant full waiver of pre-deposit was based on the conclusion that there was a permanent transfer of intangible goods from the Swedish entity to the assessee, placing the transaction outside the scope of Section 65(55b)(a) of the Finance Act, 1994. The Court found no illegality or perversity in the Tribunal's findings, indicating that no substantial question of law arose in the appeal. The Court dismissed the appeal, directing the Tribunal to expedite the disposal of the case in accordance with the law.

4. Additionally, the Court noted that the appeal was time-barred and an application for condonation of delay was filed. Since the appeal was dismissed, no order was passed on the application for condonation of delay. The Court emphasized that the dismissal of the appeal should not be construed as an expression of opinion on the merits of the controversy, reiterating the direction for the Tribunal to handle the appeal promptly.