9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 235 - AT - Service TaxDemand of service tax - intellectual property rights - Reverse charge mechanism - whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002 - Held that - Agreement for grant of license or transfer / permission to use technology was effected before 10.09.2004. The fact that M/s DHPL continued to manufacture and sell using such transferred technology even after the introduction of service tax on IPR cannot be considered as continuous supply of service. The rendering of service is effectively determined by the date of transfer / permission to use technology by M/s Denso, Japan which was prior to the introduction of tax liability on such service. - Commissioner (Adjudication) Service Tax, Delhi in his order dated 28.02.2011, in para 3.6.2, categorically examined the legal position and concluded that the allegation in the show cause notice that the service was provided on continuous basis is incorrect. Only payment of service was spread over a period of time. The service was performed as soon as the technology was transferred. - Decided against Revenue.
Issues:
1. Discrepancy in decisions by departmental authorities regarding service tax liability on intellectual property rights. 2. Interpretation of agreement for transfer of technology and its impact on service tax liability. 3. Application of proviso to Rule 6(1) of Service Tax Rules, 2004. 4. Determining the point of taxation for intellectual property rights services. 5. Applicability of previous tribunal decisions on similar issues. Issue 1: Discrepancy in decisions by departmental authorities The case involved two appeals, one by the Revenue and another by the assessee, concerning the demand for service tax under the category of intellectual property rights. The Joint Commissioner confirmed the demand for service tax and imposed a penalty, while the Commissioner (Adjudication) dropped the demand in a separate notice. The discrepancy arose from different interpretations of the same set of facts by the departmental authorities. Issue 2: Interpretation of agreement for transfer of technology The main contention was whether the service tax liability for intellectual property rights services should apply to M/s DHPL, who entered into an agreement with Denso, Japan for transfer of technology in 2002. The argument focused on whether the transfer of technology occurred before the introduction of service tax on intellectual property services, thereby exempting M/s DHPL from the tax liability. Issue 3: Application of proviso to Rule 6(1) of Service Tax Rules, 2004 The consultant for M/s DHPL argued that no service tax should be payable for services provided during a period when such services were not taxable, as per the proviso to Rule 6(1) of the Service Tax Rules, 2004. This argument aimed to support the position that the transfer of technology occurred before the service tax was introduced, thus exempting M/s DHPL from the tax liability. Issue 4: Determining the point of taxation for intellectual property rights services The central point of decision was whether the intellectual property rights service was received by M/s DHPL after 10.09.2004, based on the agreement entered into in 2002. The Tribunal referred to previous decisions to analyze the issue, emphasizing that the date of transfer of technology was crucial in determining the tax liability, rather than the periodic payment or use of the technology post-introduction of service tax. Issue 5: Applicability of previous tribunal decisions The Tribunal relied on previous decisions such as Modi-Mundipharma Pvt. Ltd. and Petronet LNG Ltd. to support its findings. These decisions highlighted that the transfer of technology before the introduction of service tax exempts the recipient from tax liability, irrespective of the payment structure or continued use of the technology post-tax introduction. In conclusion, the Tribunal rejected the Revenue's appeal and allowed M/s DHPL's appeal, emphasizing that the transfer of technology occurred before the introduction of service tax on intellectual property rights, thereby exempting M/s DHPL from the tax liability. The judgment provided a detailed analysis of the agreement terms, legal provisions, and precedent to arrive at its decision.
|
