2026-VIL-1189-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Intellectual Property Rights Services – Taxation of Technical Know-how Payments – Appellant, engaged in bus body building, entered into a Technical License Contract Agreement with its parent company under which it received the right to use technical documentation and know-how paying royalties in consideration thereof - Whether royalty payments made by the appellant for technical know-how and technical documentation constitute Intellectual Property Rights (IPR) services liable to service tax under Section 65(55a) of the Finance Act, 1994 – HELD – The Royalty payments made for technical know-how do not constitute IPR services chargeable to service tax. The Technical License Contract Agreement clearly stipulates that the appellant receives no right or claim to trademarks, trade names, design rights, patents or copyrights, but only a non-exclusive and non-transferable right to use technical documentation and know-how for manufacturing, assembling and quality control purposes - Further, as per the Board's Circular No.B2/8/2004-TRU dated 10.09.2004, only IPRs covered under Indian law in force are chargeable to service tax, and since the technical know-how received by the appellant is not registered under any Indian law, the question of paying service tax on IPR services does not arise. The definition of IPR under Section 65(55a) specifically includes only trademarks, designs, patents or similar intangible property, but excludes technical know-how - The Tribunal in appellant own precedent in an identical set of facts held that where the Commissioner fails to establish the existence of any intellectual property right in the transaction, the demand cannot be sustained - The impugned order confirming the service tax demand is set aside and the appeal is allowed
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