service tax on intellectual property right

1. 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 B012103344T/5 dated 134940334 4 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 6roperty /ights !i e I6/s" such as patents& copyrights& trademar's and designs The definition of ta7able ser)ice includes only such I6/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& I6/s co)ered under Indian law in force at present alone are chargeable to ser)ice ta7 and I6/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 231131033448 T dated 19 39 0334& 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 I6/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 051031048T dated 034640310& Temporary transfer or permitting the use or en+oyment of a copyright co)ered under clauses !a" or !b" of sub4section !1" of section 1< of the Indian =opyright ,ct& 1959 !14 of 1959"& 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<& temporary transfer or permitting the use or en+oyment of a copyright relating to cinematographic films was fully e7empt so far* now& this e7emption will be restricted to e7hibition of cinematograph films in a cinema hall or a cinema theatre Cess paid on import of technology: ,s per ?otification ?o 1410310 4 8er)ice Ta7& dated 19 3< 0310& the ta7able ser)ice in)ol)ing import of technology would be e7empt from so much of the ser)ice ta7 le)iable thereon under section 66B of the said ,ct& as is e@ui)alent to the amount of cess payable on the said import of technology under the pro)isions of section < of the /esearch and .e)elopment =ess ,ct& 1926. 1.4. oint of taxation of ! " ,s per /ule 2 of point of ta7ation rule& 0311& in respect of royalties and payments pertaining to copyrights& trademar's& designs or patents& where the whole amount is not ascertainable at the time when ser)ice was performed In such case& point of ta7ation would be date of payment or in)oice is issued by pro)ider& whiche)er is earlier 1.#. $larification from $%E$ Production of alcoholic beverages under the Brand Licensing Arrangement (C.B.E &C letter !"#$# %%&'C( ! dated ).$ . %%&* 4 -any alcoholic be)erages bear brand names The Brand :wners !hereinafter called the B:"& which includes Indian subsidiaries of International brand owners& hold the intellectual property rights o)er such brand names The Aicensee !who holds the license by the 8tate Bo)ernment to manufacture such alcoholic be)erages" manufactures alcoholic be)erages under authority to use such brand name granted by the B: The B: may also pro)ide technical staff1assistance to maintain re@uired @uality The alcoholic be)erages& so manufactured are directly sold !after paying 8tate e7cise duty" by license1manufacturer and not with the B:& who is paid an agreed

sum for grant of permission to use such brand name and the technical 'now4how In such cases the B: pro)ides ta7able ser)ice& namely Intellectual 6roperty 8er)ice to the licensee1manufacturer The ta7 is chargeable on the gross amount charged by the B: from the licensee1manufacturer 1.&. $ases relating to ! " +ero +onda ,otors v. C-. ( %$ * /0 -.. !$) (CE-.A.* 4 permission gi)en to oil company to use his trade mar' on oils& lubricants and greases manufactured by the oil company would I6/ 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<a 1mpe3 ( %%=* $&& .a3man /% (,ad +C* % -aster copies of film songs and music are goods 'o (oin google group regular updates or )uery on service tax send mail to