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TMI Blog2024 (4) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... cal knowhow provided by a foreign company to an Indian company under a licence for manufacture of goods for consideration of Royalty equal to a percentage of net sale price of the goods, was nowhere registered / patented in India as an IPR service and therefore, the recipient of such service was not liable to pay Service Tax under RCM as IPR service - the transfer of technology by M/s. Rosboron export would not qualify as intellectual property right within the meaning of Section 65(55a) of the Act for the various aspects as listed in paragraph 3.1 of this Order and therefore, would not be covered under the definition of intellectual property service within the scope of Section 65(55b). Amount received from the Malaysian company i.e. M/s. Setia Technologi SDN, BHD, Malaysia against repair/rectification of MIG Engines - HELD THAT:- The activity of repairs and maintenance was carried out within the jurisdiction of India and therefore was liable for tax under Section 65(105)(zzg) as management, maintenance or repair service and was liable for payment of duty in terms of Rule 3(1)(ii) of the Export of Services Rules, 2005. The Ld. Commissioner vide the impugned order has categorically h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Malaysian company i.e. M/s. Setia Technologi SDN, BHD, Malaysia against repair/rectification of MIG Engines? (Service Tax demand amounting to Rs. 2,75,56,000/-) 3.1 During the course of audit undertaken by the Department, it was pointed out that the appellant were liable to pay Service Tax under reverse charge mechanism (RCM), towards expenses incurred by them in foreign currency on account of Licence Fee, Documentation charges and Foreign Technician Fees. The appellant was also required to pay Service Tax on amounts received from the foreign company claimed by them as Export of Service. 4. The Ld. Advocate Shri Rajen Mishra appearing for the appellant submits that pursuant to an inter-governmental agreement between the Republic of India and the Russian Federation, the Russian Corporation viz. M/s. Rosoboronexport, Moscow, Russia signed a Technology Transfer Agreement with the appellant for transfer of technical knowhow, personal instructions, training, rendering assistance for licensed production and setting up of overhaul facility with the appellant. The technology so received was made use of by the appellant and the Licence Fee thereto along with other incidental expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of intellect, which may be in the form of an invention, design, product, process, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force. As the phrase law for the time being in force implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. 9.2 A permanent transfer of intellectual property right does 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 dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this Tribunal in the case of SICPA India Pvt. Ltd. v. Commissioner of Cus., C.Ex. S.T., Siliguri [2018 (15) G.S.T.L. 375 (Tri. Kol.)] held that technical knowhow provided by a foreign company to an Indian company under a licence for manufacture of goods for consideration of Royalty equal to a percentage of net sale price of the goods, was nowhere registered / patented in India as an IPR service and therefore, the recipient of such service was not liable to pay Service Tax under RCM as IPR service. 9.3 We thus feel that the transfer of technology by M/s. Rosboronexport would not qualify as intellectual property right within the meaning of Section 65(55a) of the Act for the various aspects as listed in paragraph 3.1 of this Order and therefore, would not be covered under the definition of intellectual property service within the scope of Section 65(55b). 10. We further note that this Tribunal in the assessee s own case, on more than one occasion, has held that the service charge received against foreign technician fees for repair and overhaul of the aircraft, as undertaken with the assistance of foreign technicians, was not includible in the value of the taxable services [ref.: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation, alleging suppression of facts unearthed during audit of the company s record. In view of the fact that the appellant is a public sector company completely under the control of the Ministry of Defence and owned by the Government of India, we find it rather unacceptable and quite improper to assume intent to evade payment of duty on the part of the organization. We therefore are not in agreement with the findings of the Ld. Commissioner that the appellant had deliberately suppressed material information, wrongly classifying as Export of Service with intent to evade duty. The appellant on the contrary has pointed out that it was rather inappropriately shown as Export of Service, however, nothing was concealed in the statutory records and returns filed. Thus, at best, it could be a case of misinformation, wrong classification and not suppression. We do not find merit to impute the charge of suppression to a government organization owned by the Ministry of Defence, for the non-payment of duty / tax with intent to evade the same by suppressing the material information, more so when it is depicted inappropriately and construed accordingly. 11.3 Moreover, we find that the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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