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TMI Blog2020 (11) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... but there is only a transfer of right to use. It is found that besides the Deed of Assignment clearly showing that there is an exclusive perpetual and irrevocable transfer of trademark and Intellectual Property Rights in favour of the appellant from the other corroborative evidence produced by the appellant which has not been considered by the Commissioner at all. The appellant has also produced on record the Income Tax Assessment Order for the financial year 2006-2007 wherein the Commissioner has recorded the purchase of trademark by the appellant - further, the appellants have got registered in his favour Foster s trademark as a proprietor under the Trademark Act, 1999. The assignment of trademark and the IPR amounts to permanent transfer and no service tax is applicable on permanent transfer of IP Rights by Foster s to the appellant. Extended period of Limitation - HELD THAT:- The Department was fully aware of the Assignment Deed executed by the appellant with Foster s Australia - Further, the transfer of Deed of Assignment was disclosed by the appellant in the Books of Accounts and with the Income Tax Authorities and was also registered in their name as proprietor u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the audit party sought details from the appellant, inter alia, with respect to expenditure in foreign currency incurred by the appellant, during the financial year 2006-2007. Specifically, one of the items under scrutiny was with respect to assignment of trademark by Foster s Australia Ltd. (Fosters) to the appellant for which the Deed of Assignment dated 12/09/2006 was executed and payment of ₹ 162 crores was made by the appellant to Foster s. Appellant filed reply to the audit objections raised by the respondent and clarified to the audit authorities that this was the case of permanent transfer of all rights, title and interest in the said trademark/brand by Fosters to the appellant and the said transaction qualified as permanent transfer or sale transaction and therefore was not liable to service tax. The Department was not satisfied with the reply of the appellant and thereafter a show-cause notice dated 21/04/2011 was issued raising a demand of ₹ 20,03,80,320/- (Rupees Twenty Crores Three Lakhs Eighty Thousand Three Hundred and Twenty only) along with interest and penalty. Appellant filed detailed reply to the show-cause notice along with all the documents a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions: a. Tata Consultancy Services Ltd. Vs. Commissioner of Service Tax, Mumbai reported in 2016 (41) S.T.R. 121 (Tri.-Mumbai) b. ABB Ltd. Vs. Commissioner of C.Ex. S.T., LTU, Bangalore reported in 2019 (24) G.S.T.L. 55 (Tri.-Bang.) c. Asea Brown Boveri Ltd. Vs. Commr. of C. Ex. S.T., LTU, Bangalore reported in 2017 (49) S.T.R. 209 (Tri.-Bang.) d. Technova Imaging Systems Pvt. Ltd. Vs. Commissioner of C. Ex., Mumbai reported in 2019 (31) G.S. T.L. 472 (Tri.-Mumbai) 4.1. He further submits that the learned Commissioner has relied on Clause 7.1 of the Deed of Assignment. This clause is a general commercial clause and has nothing to do with deciding taxability of the transaction under Service Tax law. In fact the very same clause at the end states that the appellant has right to transfer the rights received under the Deed thereby negating the basis to uphold the demand. It is his further submission that in the present case it is evident from the Deed of Assignment on record as well as other corroborative evidence produced by the appellant such as trademark registration obtained by the appellant as owner of the trademark as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted on 12/09/2006 and during the same period, the appellant was audited by the Revenue and separate show-cause notice No. 67/08-09 dated 31/03/2009 was issued for the period 10/09/2004 to 31/03/2008 and the present show-cause notice for the over lapping period being the second show-cause notice for the same period cannot be issued by invoking the extended period of limitation. He further submitted that since the transaction of Deed of Assignment having been disclosed in the books of account and with the Income Tax authorities and there being sufficient support to contend the non-taxability of the transaction under service tax legislation, the dispute involved is pure question of law and interpretation and the appellant cannot be charged with suppression or misrepresentation in such a case thereby enabling the Revenue to invoke extended period of limitation. Learned counsel also submitted that imposition of simultaneous penalty under Section 76 and 78 cannot be imposed in view of the decision of the Panjab Haryana High Court in Commr. of Central Excise Vs. Pannu Property Dealers, Ludhiana 2011 (24) S.T.R. 173 (P H) and Commissioner of Central Excise Vs. First Flight Courier L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 is as follows : [(55a) intellectual property right means any right to intangible property, namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright; Which has been inserted by Finance Act, 2004 dated 10-9-2004 (made effective from 10-9-2004) Intellectual Property Service as defined under Section 65(55b) is as follows : (55b) intellectual property service means, - (a) transferring, [temporarily]; or (b) Permitting the use or enjoyment of, any intellectual property right;] Taxable Service concerning intellectual property service as defined in Section 65(105)(zzr) is as follows : Section 65(105) taxable service (concerning intellectual property right) means any [service provided or to be provided] - (zzr) to any person, by the holder of intellectual property right, in relation to intellectual property service. From the above provisions concerning Intellectual Property Right , Intellectual Property Service , and Taxable Service of Intellectual Property Right , we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 7.1 of the Deed reads as follows: No party may assign or otherwise deal with a right under this document, or allow any interest in such right to arise or be varied, in each case without prior written consent of the other parties, which consent must not be unreasonably withheld or delayed. Any assignment or purported assignment in breach of clause 7.1 will be of no effect. For the avoidance of doubt, whilst the parties have agreed certain conditions subject to which the Trademarks or Foster s Brand Intellectual Property may be transferred, nothing in this clause 7.1 will be construed as restricting the Assignee s right to transfer the Trademarks or Foster s Brand Intellectual Property. After seeing the above clauses of the Deed of Assignment, we find that the impugned order has wrongly interpreted the terms of the Deed to mean that there is only grant of right to use the trademark and no permanent transfer of trademark to the appellant in India. The learned Commissioner has ignored the substance of the clauses and has picked a part of the clause to suit his purpose and used the same to hold that there is no assignment of the trademark and the brand I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not amount to rendering of service. On such transfer, the person selling these rights no longer remains a holder of intellectual property right so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs. 9.3 In case a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the cess amount so paid would be deductible from the total service tax payable (refer Notification No. 17/2004-S.T., dated 10-9-2004). From the contents of above Para 9 of C.B.E. C. Circular dated 10-9-2004 it is clear that the wordings under any law for the time being in force means the laws as applicable in India. It clarifies that IPRs covered under Indian Law in force alone are chargeable to Service Tax. It further says that IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services of Intellectual Property Services . Revenue has not been able to prove in any manner that right to any of the intangible properties is covered as IPR(s) under any of the relevant Indian law. In case of undisclosed informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tellectual Property Right Services . We find that the definition of Intellectual Property Right must be satisfied to term the services received by the appellant as Intellectual Property Right Services. We find no clue at all in the records as to which type of Intellectual Property Right is being assigned to the Technical know-how received by the appellant. It is obvious from the definition of Intellectual Property Right that the right has to be a specific Right under a specific Law. Examples are given under the definition such as the Trade Mark which is a right provided under Trade Marks Act . Similarly the right mentioned as design in the definition is a right under the Design Act . Therefore we find that the technical know-how received by the appellant and the royalty payment made by the appellant to Unisys is nowhere established to result from the use of any Intellectual Property Right. 4.2 We may further go on to add that the Intellectual Property Right should be a right under the Indian Law. Intellectual Property Right not covered by the Indian laws would not be covered under taxable service in the category of Intellectual Property Right Services. We are forti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a permanent transfer of intellectual property right does not amount to rendering of service. In the present case, the appellant has become a co-owner of the intellectual property which would mean that the transfer is permanent. Therefore, the transaction does not come under the purview of Section 65(55b) of the Finance Act, 1994. 6.5. We have gone through the decisions relied upon by the learned DR. These decisions cited supra are not applicable to the facts of the present case and are distinguishable on facts. 7. In view of our discussion, analysis and the case-laws quoted, it is our considered opinion that the assignment of trademark and the IPR amounts to permanent transfer and no service tax is applicable on permanent transfer of IP Rights by Foster s to the appellant. As far as invoking the extended period of limitation is concerned, we find that the Department was fully aware of the Assignment Deed executed by the appellant with Foster s Australia. The Deed of Assignment was executed on 12/09/2006 and the present show-cause notice was issued on 21/04/2011 and during the same period the Department audited the appellant and also issued a show-cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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