2026-VIL-587-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Applicability of Service Tax under Intellectual Property Rights Service (IPRS) - Whether the exchange of non-public information like designs, plans, ideas, and cost data between the appellant and a foreign entity would fall under the ambit of IPRS under Section 65(55b) of the Finance Act 1994 and thereby attract service tax – HELD - For an activity to be taxed under IPRS, the intangible property like trademark, design, patent, etc. should be governed and enforceable under Indian laws – In the instant case, there is nothing on record to suggest that said confidential information was otherwise protected under any Indian law or otherwise and therefore such exchange of information could not have been brought under the purview of IPRS - Further, even though, classification itself has not been contested under the category of IPRS, even though there were certain clarifications issued by Board and certain judgments were also available on this issue, the appellant had opted not to contest the classification on merit - Since the confidential information exchanged was not protected under any Indian law, it could not be considered as an IPR and thus, the demand under IPRS is not maintainable. However, service tax demand is upheld as the appellant did not contest the classification - The service tax demand under IPRS is upheld, but the payment made by the appellant through CENVAT credit is held to be valid. The penalty under Section 15 of the CENVAT Credit Rules 2004 is set aside, but the penalty under Sections 76, 77, and 78 of the Finance Act 1994 is upheld – The appeal is partly allowed - Utilization of CENVAT Credit for payment of service tax under Reverse Charge Mechanism - Whether the appellant could utilize the available CENVAT credit to pay the service tax liability under RCM prior to the amendment in Cenvat Credit Rules 2004 w.e.f. 01.07.2012 – HELD - The appellant was entitled to utilize the available CENVAT credit to discharge the service tax liability under RCM for the period prior to 01.07.2012, as there was no statutory bar during that period. The payment made by the appellant by debiting the CENVAT credit account was correct and should be adjusted towards the confirmed demand.
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