Soremartec S. A. Vs State of Maharashtra (Bombay High Court)
Bombay High Court quashed the assessment order on account of breaching statutory provisions of section 23(4) of the MVAT; violation of the principles of natural justice and fair play, non-application of mind, and legal malafides.
Facts- Petitioners 1 and 2 are established per Luxembourgian Laws. Petitioner No.3 is a company incorporated under the Indian Companies Act of 1956. Petitioners 1 and 2 had, inter alia, granted the 3rd Petitioner the right to use their IPR in India. In that sense, Petitioners Nos.1, 2, and 3 are group companies. By a product license agreement effective from 1 April 2013, the right to use such IPR in India was also extended to M/s. Imsofer Manufacturing India Pvt Ltd. A product license agreement effective from 1 January 2013 was also entered into between the 2nd Petitioner and MPG Multi Production Group India Pvt Ltd concerning IPRs.
On 5 May 2023, the Petitioner No. 3 in Pune, India, received a notice dated 3 May 2023 in Form 301 for assessment for FY 2015-2016, addressed to the 1st and 2nd Petitioners seeking to levy VAT on the value of ‘royalty’ payments made by the 3rd Petitioner against the license to use IPRs and technical know-how granted by 1st and 2nd Petitioner by treating the same as a ‘sale of goods’.
