Customs, Excise and Gold Tribunal - Delhi
Aviat Chemicals Pvt. Ltd. vs Cce (Service Tax) on 7 June, 2004
Equivalent citations: 2004(94)ECC465, 2004(170)ELT466(TRI-DEL), 2006[3]S.T.R.291, [2007]6STT510, (2008)14VST7(CESTAT-NEW DELHI)
ORDER C.N.B. Nair, Member (T)
1. When the matter was posted for hearing on 14.5.2004 for consideration of stay application, upon hearing both sides, it was felt that the appeal itself could be disposed of. Accordingly, after dispensing with the requirement for pre-deposit, we took up the appeal for hearing and disposal.
2. We have perused the records and heard both sides. The appellant is a manufacturer of medicines. It entered into an agreement for patents, trademarks, brand names, etc. Under Registered User Agreements, and/or Licensed User Agreement, the appellant allowed other manufacturers to produce medicines under trademarks owned by it. Under the impugned order, the Revenue authorities have directed the appellants to pay service tax in respect of the receipts under these agreements. The Revenue authorities have taken the view that the relationship between the appellant and other parties is that of "Consulting Engineer" to a client.
3. The contention of the appellant is that trademark is in the nature of property and the right to use trademark is a transaction in property and not consultancy or advice. They have relied on several judicial decisions in support of their contention. Reference has been made to the decision of the Bombay High Court in the case of Commissioner of Sales Tax v. Duke & Sons Pvt. Ltd. 1999 (112) STC 370 in support of their contention that trademarks are goods and licence to use trade mark is nothing but a right to use property and the grant of licence to use trademark is a transaction of sale.
4. The appellant is right in its contention contended that no consultancy or advice is involved in leasing or sale of trademarks. It is a transaction in intangible property and not a case of granting any advice. The impugned order is, therefore, in error in demanding service tax after treating the grant of right to use trademark as consultancy.
5. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any, to the appellants.