2023 (4) TMI 973 - AT - Service Tax

Levy of Service Tax - royalty for Intellectual Property Rights (IPR) services - Section 68(2) of the Finance Act, 1994 - HELD THAT - The issue is decided in the case of M/S. ASIA CRYO CELL PVT. LTD. VERSUS CCE ST, CHENNAI 2018 (2) TMI 149 - CESTAT CHENNAI where it was held that In the present case, the IPR is not registered for enforcement under any law including Trade Mark Act in India. This is an admitted fact. IPR now under consideration can be construed to be recognized by the Indian Law, if he satisfies the requirement of IPR as per law. Registration is not a requirement - the appellant cannot be held liable for service tax under IPR. By the above, it appears that the CESTAT Benches have consistently held that the payment of royalty for IPR services was not liable to tax in India. Following the above ratio decidendi, therefore, the demands raised are not proper, for which reason the impugned orders are set aside. Appeal allowed.

Summary

Issues involved:
The issue involved in this case is whether the Revenue is justified in demanding Service Tax on the royalty paid to M/s. CCI.

Comprehensive details of the judgment:

1. The undisputed facts reveal that the appellant is involved in the process of separation, isolation, storage, and cryo-preservation of Umbilical Cord and Stem Cells under a 'Licence and Royalty Agreement' with M/s. Cryo-Cell International Inc., USA, where the appellant pays royalty to M/s. CCI as per the agreement.

2. The Show Cause Notices were issued to the appellant for not registering under Intellectual Property Rights (IPR) service and not paying Service Tax on the royalty payments made to M/s. CCI. The Adjudicating Authority confirmed the demands made in the Show Cause Notices.

3. The appellant appealed to the Commissioner of Central Excise (Appeals) who upheld the demands, leading to the present appeals before the CESTAT Chennai.

4. The appellant argued that previous cases decided by the Chennai Bench of the CESTAT had settled the issue in favor of the appellant, citing specific cases where similar disputes were resolved in favor of the appellant.

5. The Revenue representative relied on the findings of the lower authorities.

6. After hearing both sides and examining the documents, the CESTAT found that previous decisions by the CESTAT Benches consistently held that the payment of royalty for IPR services was not liable to tax in India. Therefore, the demands raised by the Revenue were deemed improper, and the impugned orders were set aside.

7. The appeals were allowed with consequential benefits, if any, as per law.

Separate Judgement:
None.