2017 (10) TMI 449 - AT - Service Tax

Reverse Charge Mechanism - IPR service - whether IPR service received by the appellant from the service providers namely M/s. Preesman International BV Netherlands, M/s. Piet Schreurs, De Kwakel BV, Netherlands and M/s. Marhein Rose & Trading Co., Netherland for cultivation and sale of cut flowers under the licence agreement is liable for service tax in the hands of the appellant under reverse charge mechanism? - Held that - the issue raised for the first time before this bench by the appellant that IPR in the present case does not cover under the definition of IPR service provided under the Finance Act 1994 is indeed question of law which needs consideration - Since this issue was not raised before any of the lower authorities the matter needs to be remanded to the adjudicating authority for reconsideration of the entire case - appeal allowed by way of remand.

Summary

Issues involved: Whether IPR service received by the appellant for cultivation and sale of cut flowers under a license agreement is liable for service tax under reverse charge mechanism.

Analysis:
The primary issue in this case revolves around the liability of the appellant to pay service tax on the IPR service received from foreign companies for the cultivation and sale of cut flowers. The appellant contends that since the IPR service is not recognized under any Indian law, it does not fall under the definition provided in the Finance Act. This argument is supported by citing various judgments such as Reliance Inds. Ltd. Vs. CCE, Chambal Fertilisers & Chemicals Ltd., Asea Brown Boveri Ltd., and others. The appellant also asserts that the demand is time-barred, relying on judgments like Uniworth Textiles Ltd. and Ajay Enterprises P. Ltd. Furthermore, the appellant argues against the imposition of a penalty based on the Tribunal's judgment in Fermanta Biotech Ltd.

The appellant raises the issue of whether the IPR service in question falls under the definition of IPR service as per the Finance Act, asserting that this is a question of law that can be raised at any stage. Despite conceding that this issue was not raised before the lower authorities, the appellant emphasizes the need for consideration by the bench. Consequently, the Tribunal decides to remand the matter to the adjudicating authority for a thorough reconsideration in light of the appellant's submissions and the relevant judgments cited. The Tribunal specifically highlights that since the issue was not raised before any lower authority previously, it warrants a fresh examination. All other issues are left open for further review.

In conclusion, the appeals are allowed by way of remand to the adjudicating authority for a detailed reassessment of the case concerning the liability of the appellant for service tax on the IPR service received for the cultivation and sale of cut flowers. The Tribunal's decision underscores the importance of addressing the specific legal question raised by the appellant and the necessity of a comprehensive review in light of the submissions and legal precedents cited during the proceedings.