2013 (3) TMI 82 - AT - Service Tax

Reverse Charge - Levy of service tax on Intellectual property Rights (IPR) - Trade Mark License Agreement - whether only a registered trademark has a right under any law for the time being in force In India and whether any law other than enacted law In force In India will come within the meaning of any law for the time being in force - held that - we are not in agreement with the argument of the appellant in view of Section 11(3) of the Trademarks Act, 1999 and Section 27(2) of the said Act in view of the fact that the trademark owner is legally entitled to enforce certain rights against any other person using such trademark even though the trademark Is not registered In India. Prmia facie case against the appellants - pre deposit ordered equal to 50%.

Summary

Issues:
1. Whether the service received by the appellant from a foreign company is liable to service tax under Section 66A of the Finance Act, 1994.
2. Whether the trademark "AREVA" not registered in India is considered an Intellectual Property Right (IPR) under Indian law.
3. Whether unregistered trademarks have legal recognition and rights under Indian law.
4. Whether the appellant is entitled to a complete waiver of pre-deposit of dues arising from the impugned order for admission of the appeal.

Issue 1:
The Revenue contended that the service received by the appellant from Areva T&D Holding SA, France, through a Trade Mark License Agreement is liable to service tax under Section 66A of the Finance Act, 1994. A demand of Rs. 2,24,73,879/- was confirmed against the appellant. The appellant challenged this before the Tribunal, seeking waiver of pre-deposit of dues during the pendency of the appeal.

Issue 2:
The appellant argued that the trademark "AREVA" not registered in India does not qualify as an IPR under Indian law, hence not subject to service tax. They cited definitions of Intellectual Property Right and Intellectual Property Service under Section 55(a) and 55(b) of the Finance Act, 1994, along with clarifications by the C.B.E. & C. The appellant emphasized that only trademarks registered in India are recognized under the Trademarks Act, 1999, and thus, the demand for service tax is legally unsustainable.

Issue 3:
The Tribunal analyzed the legal recognition of unregistered trademarks under Indian law. Referring to Sections 11(3) and 27 of the Trademarks Act, 1999, the Tribunal concluded that even unregistered trademarks have rights in India, allowing the owner to enforce legal actions against unauthorized use. Therefore, the Tribunal found that the appellant's argument for complete waiver of pre-deposit based on the unregistered status of the trademark was not valid.

Issue 4:
Considering the arguments and legal provisions, the Tribunal ruled that the appellant did not establish grounds for a complete waiver of pre-deposit. Instead, the Tribunal directed the appellant to make a pre-deposit of 50% of the tax demanded within eight weeks for admission of the appeal, with the balance dues waived for admission and collection stayed during the appeal's pendency.

This judgment highlights the significance of legal recognition of unregistered trademarks under Indian law and the implications of Intellectual Property Rights on service tax liabilities. The decision underscores the need for compliance with tax obligations even in cases involving unregistered intellectual property.