2025 (3) TMI 1060 - AT - Service Tax

Levy of service tax - IPR service or not - ttk logo used by the Appellant s group companies was an artistic work registered under the Copyright Act or a trademark? - HELD THAT - The logo ttk were only used to project the image of the manufacturer generally and did not establish any relationship between the mark and the products manufactured/ distributed by the group companies of the Appellant. It only is a house mark which is usually devised in the form of an emblem word or both and it is for identification of the manufacturer/distributor. Therefore this monograph which only identifies the manufacturer/distributor would not make the product patent or proprietary. The House mark is used generally as an emblem of the manufacturer/distributor projecting the image of the manufacturer whereas Brand name is a name or trademark either unregistered or registered under the Act. Therefore it is not necessary that Brand name should be compulsorily registered - it is found that the definition of service under IPR excludes copyrights and as the ttk logo is registered under the copyrights act service tax demand is questionable. The issue is settled in favor of the Appellant by this Tribunal s earlier decision involving the same Appellant for an earlier period following the decision of the Hon ble Supreme Court in M/s. Astra Pharmaceuticals 1994 (12) TMI 77 - SUPREME COURT where it was held that the Dextrose injections manufactured by the appellant were not patent and proprietary medicines subject to duty under Tariff Item 14E. Conclusion - Intellectual property right under Section 65(55a) excludes copyrights and the ttk logo s registration under the Copyright Act exempts it from service tax under IPR services. The impugned order set aside - appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The appeals centered around two primary issues:

i. Determining whether the "ttk" logo used by the Appellant's group companies was an artistic work registered under the Copyright Act or a trademark.

ii. Assessing the sustainability of the demand for service tax on the royalty income received by the Appellant under the Intellectual Property Rights (IPR) service category.

ISSUE-WISE DETAILED ANALYSIS

1. Nature of the "ttk" Logo: Artistic Work vs. Trademark

- Relevant legal framework and precedents: The definition of Intellectual Property Rights under Section 65(55a) excludes copyrights. The Copyright Act defines "artistic work" and provides rights associated with it. The Trademark Act defines trademarks and their usage.

- Court's interpretation and reasoning: The Tribunal analyzed whether the "ttk" logo served as a trademark or merely as an artistic work. It emphasized that the logo was used as a house mark for identification of the manufacturer/distributor and not as a brand name or trademark.

- Key evidence and findings: The Appellant provided evidence of the logo's registration under the Copyright Act as an artistic work. The Tribunal noted that the logo was used alongside distinct registered trademarks of products, such as "Levokast" and "Apiverin-M," indicating that the logo itself was not a trademark.

- Application of law to facts: The Tribunal applied the definitions under the Copyright Act and Trademark Act, concluding that the logo's registration as an artistic work under the Copyright Act exempted it from being treated as a trademark for service tax purposes.

- Treatment of competing arguments: The Department argued that the logo functioned as a trademark, but the Tribunal found this unsubstantiated, given the distinct product trademarks and the logo's registration under the Copyright Act.

- Conclusions: The Tribunal concluded that the "ttk" logo was an artistic work under the Copyright Act, not a trademark, and thus not subject to service tax under IPR services.

2. Sustainability of Service Tax Demand

- Relevant legal framework and precedents: The service tax provisions under Section 65(105)(zzr) and the exclusion of copyrights from IPR services were central. The Tribunal referenced prior decisions, including M/s. Astra Pharmaceuticals and ESPN Software India Pvt. Ltd., to support its reasoning.

- Court's interpretation and reasoning: The Tribunal emphasized that service tax under IPR services does not apply to copyrights. It also noted prior Tribunal decisions favoring the Appellant, reinforcing that the royalty income was not taxable under IPR services.

- Key evidence and findings: The Tribunal highlighted the Appellant's compliance with VAT on royalty income, indicating mutual exclusivity between VAT and service tax.

- Application of law to facts: The Tribunal applied the exclusion of copyrights from IPR services to the facts, finding the service tax demand unsustainable.

- Treatment of competing arguments: The Department's reliance on the logo being a trademark was dismissed based on the Tribunal's interpretation of the logo's registration and usage.

- Conclusions: The Tribunal concluded that the service tax demand was unsustainable, given the logo's classification as an artistic work and the prior judicial precedents.

SIGNIFICANT HOLDINGS

- The Tribunal reiterated that "Intellectual property right" under Section 65(55a) excludes copyrights, and the "ttk" logo's registration under the Copyright Act exempts it from service tax under IPR services.

- The Tribunal referenced its prior decision in favor of the Appellant, reinforcing the principle that artistic works registered under the Copyright Act are not subject to service tax as IPR services.

- The Tribunal set aside the impugned Order-in-Original Nos. 02-08/2014-2015, allowing the appeals with consequential benefits to the Appellant.