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2023 (10) TMI 170 - AT - Service TaxRefund claim - transfer of technology - Export of Service or not - technical knowhow transferred by them to a recipient in Singapore wherein consideration was received in US Dollar - HELD THAT - An identical issue has been decided by Tribunal in the case of M/S. MUNJAL SHOWA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, DELHI (GURGAON) AND (VICE-VERSA) 2017 (6) TMI 819 - CESTAT CHANDIGARH . In the said decision following has been observed that Admittedly, Trade Mark rights which have been used by the appellant-assessee are not registered in India, therefore, the same are not liable to tax under IPR service. It can be seen from the decision of Tribunal in the case of Munjal Showa Ltd. that to qualify as Intellectual Property Right, the said right should be protected by some law for the time being in force within India. It is seen that Revenue has not pointed out any law under which the said technical knowhow being transferred to Sicgen Singapore is protected. In absence of any clear evidence of the said knowhow being protected by any law, the same cannot qualify as Intellectual Property Right and therefore, no tax can be levied of such transfer of technical knowhow under the head of Intellectual Property Service . Thus, no tax was leviable on the said transaction under the head of IPR - appeal allowed.
Issues Involved:
1. Whether the transfer of technical know-how by the appellant qualifies as 'Export of Service'. 2. Whether the technical know-how supplied by the appellant falls under the category of 'Intellectual Property Right' (IPR) and is taxable under 'Intellectual Property Service'. Summary: Issue 1: Export of Service The appellant, Intas Pharmaceuticals Limited, transferred technical know-how to M/s Scigen, Singapore, and received payment in US Dollars. The dispute arose during an audit in September 2012, where it was objected that the service did not qualify as 'Export of Service' since the technology was used in Pune, India. The appellant argued that the technology was transferred to Singapore and could be used globally, including India, and thus qualified as 'Export of Service' under Rule 3(2) of Export of Service Rules, 2005. The Tribunal found that the recipient of the service was located outside India and the payment was received in convertible foreign exchange, meeting the criteria for 'Export of Service'. Issue 2: Intellectual Property Right The appellant contended that the technical know-how was not a taxable service under 'Intellectual Property Service' as it was not protected by any Indian law. They relied on Circular No. 80/10/2004-ST and several judicial precedents, including Tata Consultancy Services Ltd and Reliance Industries Ltd, which clarified that only IPRs protected under Indian law are taxable. The Tribunal referenced the decision in Munjal Showa Ltd., which stated that for a service to be taxed under IPR, the right must be registered in India. Since the technical know-how was not protected by any Indian law, it did not qualify as an 'Intellectual Property Right'. Consequently, no service tax was leviable on the transfer of technical know-how under the head of 'Intellectual Property Service'. Conclusion: The Tribunal concluded that the transfer of technical know-how by the appellant did qualify as 'Export of Service' and did not fall under the taxable category of 'Intellectual Property Service' due to the lack of protection under Indian law. Therefore, the appellant was entitled to relief, and the demand for service tax was set aside.
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