Services in Forms of Receipt of Patent Registered Outside India not liable to Service Tax: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the services in the form of receipts of patents registered outside India are not liable to pay service tax. 

Intas Pharmaceuticals Ltd, the appellant assessee entered into a “Technology Transfer and Licensing Agreement” with Eugenex Biotechnologies, Switzerland for development and commercialization of recombinant human erythropoietin (EPO), and the agreement envisaged 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 patent/ technologies transferred to the assessee were not registered in India and the introduction of a negative list of Services with effect from 01.07.2012 only the Intellectual Property Rights covered under the Indian Law was chargeable to Service Tax. 

R.R. Kurup, the counsel for the department contended that the transaction under the category of import of ‘Intellectual Property Service’ and sought to charge service tax on a reverse charge basis in terms of Section 66A of the Service Tax Act, 1944. 

The Bench observed that in the case of Reliance Industries Ltd, the court held that 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 patent registered outside India was not liable to Service Tax.  The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) held that only if the technology was protected by some law of India then it can be charged to service tax under the head of ‘Intellectual Property Service’. 

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates