2019 (4) TMI 29 - AT - Service Tax

Intellectual Property Right Services - demand of service tax - Held that - The facts in the present case and in the case of COMMISSIONER, CUSTOMS, CENTRAL EXCISE & SERVICE TAX, GHAZIABAD VERSUS M/S DABUR INDIA LTD. 2018 (3) TMI 856 - CESTAT ALLAHABAD are identical. It was held in the said case that if the Intellectual Property Right was sold by appellant and not transferred temporarily for use then the provisions of Section 66(55b) of Finance Act, 1994 are not applicable - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Confirmation of demand under 'Intellectual Property Right Services' against the appellant.
2. Interpretation of agreements with Alembic Ltd. and Dabur Pharma Ltd.
3. Application of Section 66(55b) of Finance Act, 1994 to the sale of 'Intellectual Property Right.'

Analysis:

Issue 1:
The judgment deals with the confirmation of demand under the category of 'Intellectual Property Right Services' against the appellant. The appellant had entered into agreements with Alembic Ltd. and Dabur Pharma Ltd., which were crucial in determining the nature of the services provided and the tax implications thereof.

Issue 2:
The terms of the agreements with Alembic Ltd. and Dabur Pharma Ltd. were analyzed in detail. The agreement with Alembic Ltd. involved the transfer of 'Know-How' related to pharmaceutical products for a lump sum consideration. Similarly, the agreement with Dabur Pharma Ltd. encompassed the assignment of patents, patent applications, and related 'Know-How' for a specified consideration. The agreements were pivotal in establishing the nature of the transactions and the rights transferred.

Issue 3:
The application of Section 66(55b) of the Finance Act, 1994 was a crucial aspect of the judgment. The Tribunal referred to a previous Final Order dated 19/01/2018, which set a precedent regarding the sale of 'Intellectual Property Right.' It was held that if the 'Intellectual Property Right' was sold by the appellant and not transferred temporarily for use, the provisions of Section 66(55b) were not applicable. Relying on this precedent, the impugned order was deemed unsustainable, leading to the setting aside of the order and allowing the appeal.

In conclusion, the judgment addressed the issues related to the confirmation of demand under 'Intellectual Property Right Services,' the interpretation of agreements with Alembic Ltd. and Dabur Pharma Ltd., and the application of Section 66(55b) of the Finance Act, 1994. By analyzing the agreements and applying legal precedents, the Tribunal made a decisive ruling in favor of the appellant based on established legal principles and interpretations of relevant statutes.