2024-VIL-1708-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Intellectual Property Service, Technical Know-how Service, Payment of Royalty - Appellant, a 100% EOU, entered into a collaboration agreement with General Electrical Company and GE Medical Systems Global Technology Company to obtain a non-exclusive, non-transferable right and license to use GE intellectual property for the purpose of technology benefit and paid royalty to the foreign companies - Department issued a show-cause notice alleging that the royalty paid by the appellant is liable to service tax under the category of Intellectual Property Service under Section 65(55a) of the Finance Act, 1994 - Whether the royalty paid by the appellant for receiving the technical know-how from the foreign company is liable to service tax under the category of Intellectual Property Service - HELD - the Commissioner in the impugned order purely based on transfer of technical Knowhow has held the service to be intellectual property service - The issues whether the royalty paid on transfer of technical know-how is no longer res-integra as various Tribunals have categorically held based on the definition of IPR service and in view of the clarification dated 10-9-2004 by the Board, mere transfer of technical know-how without the law being registered/recognized in Indian laws as Intellectual Property, it cannot be considered as Intellectual Property Service - for a service to be taxable under the Intellectual Property Service, the service provider must have a right to any intangible property recognized under any Indian law, and the service must involve either transfer of such intangible property or permission to use or enjoy the intellectual property right Technical know-how is not recognized as an Intellectual Property right under any Indian law - the demand of service tax on the royalty paid for technical know-how is set aside and the appeal is allowed
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