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service tax on intellectual property right1. Intellectual property right

1.1. Meaning of intellectual property:The Term intellectual property right has not been defined in new section of 65B Interpretation of finance act 1994

In old section 66!55a" defines #intellectual property right$ as under %

Intellectual property right means any right to intangible property& namely& trade mar's& designs& patents or any

other similar intangible property& under any law for the time being in force& but does not include copyright

(urther& as per old section 66!55b" defines intellectual property ser)ice as !a" transferring& temporarily* or !b"

permitting the use or en+oyment of& any intellectual property right**

,s per -(!./" circular no B020334T/ dated 1390334 Intellectual property emerges from application of

intellect& which may be in the form of an in)ention& design& product& process& technology& boo'& goodwill etc In

India& legislations are made in respect of certain Intellectual roperty /ights !ieI/s" such as patents& copyrights&

trademar's and designs The definition of ta7able ser)ice includes only such I/s that are prescribed under law for

the time being in force ,s the phrase law for the time being in force implies such laws as are applicable in India&I/s co)ered under Indian law in force at present alone are chargeable to ser)ice ta7 and I/s li'e integrated

circuits or undisclosed information !not co)ered by Indian law" would not be co)ered under ta7able ser)ices

,s per circular no 231303348T dated 1390334& a permanent transfer of intellectual property right does not

amount to rendering of ser)ice :n such transfer& the person selling these rights no longer remains a holder of

intellectual property right so as to come under the pur)iew of ta7able ser)ice Thus& there would not be any ser)ice

ta7 on permanent transfer of I/s

1.2. Declared service,s per section 66;!c" of the act& temporary transfer or permitting the use or en+oyment of any intellectual property

right would be constitute as declared ser)ice

1.3. Mega Exemption Notification,s per entry no 15 of mega e7emption notification 0503108T dated 0360310& Temporary transfer or permitting

the use or en+oyment of a copyright co)ered under clauses !a" or !b" of subsection !1" of section 1< of the Indian

=opyright ,ct& 195 !14 of 195"& relating to original literary& dramatic& musical or artistic wor's or e7hibition

cinematograph films in a cinema hall or a cinema theatre would be e7empt from ser)ice ta7

>ide (inance act& 031

8/12/2019 Service Tax on Intellectual Property Right

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sum for grant of permission to use such brand name and the technical 'nowhow In such cases the B: pro)ides

ta7able ser)ice& namely Intellectual roperty 8er)ice to the licenseemanufacturer The ta7 is chargeable on the

gross amount charged by the B: from the licenseemanufacturer

1.&. $ases relating to !"

+ero +onda ,otors v. C- (%$* /0 - !$) (CE-A* permission gi)en to oil company to use his trade

mar' on oils& lubricants and greases manufactured by the oil company would I/ ser)ice

C1 v. -un 2 Ltd (%%)* $$ a3man /0$ (4el +C* % right to telecast T> program in foreign countries is sale

of goods

-P- 5ayam & Co 2. 6egistrar7 8- (%%!* $/) -C $$) (,ad +C* % Trade mar' is intangible goods and

transfer of right to use trade mar' is deemed sale

9reem oods v. -tate of 9erala (%%"* ! 2- /// (9er +C*% Trade mar' is goods and allowing franchisee to

use trade mar' is transfer of right o use goods and hence is deemed sale

C1 v. ;i