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TMI Blog2014 (11) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 2. M/s. Himalaya Drug Company, appellant in appeal No.ST/3340/2012 (hereinafter referred to as HDC) is a partnership firm. The firm is engaged in the research & development and manufacture of ayurvedic medicines, cosmetics and toiletries. M/s. Himalaya Global Holdings Ltd. (formerly M/s. MMI Corporation) (HGHL for short) is one of the partners in the appellant firm. HGHL is a company based in Caymen Islands, USA and does not have an office in India. M/s. Himalaya Drug Company Pvt. Ltd. (HDPL for short) is the appellant in second appeal No.ST/3341/2012 and is one of the partners in the appellant firm. It is an Indian company. 3. According to the learned counsel, all the products on which the trademarks are registered and have been resea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner from the firm. For ascertaining the quantum of consideration, the share of HGHL in the gross profit of the firm was taken and service tax with interest was demanded. In respect of Indian partner who had provided land, building and other manufacturing facilities as capital, the officers felt that HDPL was liable to pay service tax under the service category of 'business support service' and 'intellectual property rights service'. It was felt by the officers of the Revenue allowing the use of trademarks is taxable under the category of 'intellectual property service' and the activity allowing their land, building and other properties to be used by the firm has to be classified under the taxable category of 'business support service'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This submission was supported by him by referring to Section 4 of the Partnership Act, 1932. According to Section 4 of the Partnership Act, 'partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm' and the name under which their business is carried on is called the 'firma-name'. He submits that partners are not considered as separate entities and different from the firm. Liability of the partners is unlimited and if a single partner dies or leaves the partnership, the partnership deed has to be executed afresh. 6.4. He also submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm's rights in the partnership assets amounting to a transfer of assets within the meaning of Section 2(47) of the I.T. Act, 1961. 7. Learned AR would again refer us to the same Section 4 of the Partnership Act and draws our attention to the partnership deeds which form part of the records. According to the learned AR, the partnership deed executed in 1998 speaks of the persons indicated therein as partners have joined together for the purpose of continuing the business of the firm HDC which was established in the year 1930. It is his submission that therefore the persons named in the deed of partnership cannot be considered as partners. Therefore, HDPL and HGHL have to be treated as separate from M/s. HDC. However, we find that at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not correct. 9. Another submission was made by the learned AR that the partnership deed is not registered. However, we find that a submission has been made by the appellants that the partnership deed has been registered. Nevertheless, assuming that the learned AR is correct and the partnership deed is not registered, we find that registration is not compulsory in accordance with law if the partners are willing to take consequences of non-registration which are specified in the Act itself. Therefore, in our opinion, the fact that partnership deed has been registered or not may not be very relevant and at this stage and we do not consider that it would make a material difference unless we consider the statutory details and other aspects in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards payment of intellectual property rights for use of trademarks and licences. We cannot ignore the fact that besides the licensing agreement, according to the appellant, HDHL had contributed capital of Rs. 85 crores. This was not contradicted before us. Naturally the entire amount of gross profit received cannot be attributed to licence even if it is assumed that it is so. Further the submission made by the learned counsel that somehow many of the licences for which licensing agreement provided for usage by HDC were actually developed by the firm itself and according to the appellants, the registration had to be done in the name of one of the partners, because the partnership firm has no legal personality. At the same time to enable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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