Relief to Intas Pharmaceuticals: CESTAT Quashes Service Tax Demand on transfer of patent and technology on ground of Non-involving of Service category under ‘Intellectual Property Service’ [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Intas Pharmaceuticals by quashing service tax demand on the transfer of patent and technology on the ground of non-inclusion of service category under ‘Intellectual Property Service’ (IPR). 

Intas Pharmaceuticals Ltd, the appellant assessee entered into a “Technology Transfer and Licensing Agreement” with Eugenex Biotechnologies, Switzerland for the development and commercialization of recombinant human erythropoietin (EPO), and the agreement envisaged the transfer of a cell clone that produces recombinant EPO and provision of the technology, know-how, Trade secrets, etc. 

The assessee appealed against the order passed by the adjudicating authority for confirming the demand of service tax on a reverse charge basis in respect of the Technology Transfer Analysis and Agreement entered with Eugenex Biotechnologies, Switzerland. 

Hardik Modh, the counsel for the assessee contended that the agreement entered by the assessee with the foreign supplier for the transfer of patent and technology is not recognized in India and is not protected by any law in India and there was no evidence to suggest that the patents of the foreign companies were registered under the Patent Act of India and any services in the forms of receipt of a patent registered outside India was not liable to Service Tax. 

R.R. Kurup, the counsel for the department contended that the demand of service tax of Rs. 49,01,798/- was confirmed under Intellectual Property Right Service and the demand raised was as per the law and liable to be sustained. 

The Bench observed that in the case of Chambal Fertilizers and Chemicals Ltd, the court held that the services received by the assessee are not covered under IPR service, under Section 65(105)(zzr) of the Finance Act, 1994. Therefore, no service tax was payable by the assessee. 

The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) held that the technology had been imported from abroad and no evidence of any protection under any law for the time being in force in India had been produced by Revenue and no demand can be made under the head of ‘Intellectual Property Service’.

To Read the full text of the Order CLICK HERE

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