Volvo Buses (India) Pvt Ltd Vs Commissioner of Service Tax (CESTAT Bangalore)
Summary: M/s. Volvo Buses India Pvt. Ltd. appealed against Order-in-Original No.50 & 51/2014 dated 13.10.2014 passed by the Commissioner of Service Tax, Bangalore, which confirmed service tax, interest and penalties on royalty payments made to its parent company, M/s. Volvo Bus Corporation, Sweden. The dispute concerned the classification of payments under the “Technical License Contract Agreement” as Intellectual Property Rights Services under Section 65(55a) and Section 65(55b) of the Finance Act, 1994.
The appellant submitted that the royalty was paid for the right to use technical know-how and technical documentation for manufacturing, assembling, quality control and related activities, and not for trademarks, designs, patents or other intellectual property rights recognised under Indian law. It also relied on the Board’s Circular No.B2/8/2004-TRU dated 10.09.2004 and the Tribunal’s earlier decision in ABB Limited vs. Commission of Central Excise and Service Tax: 2019 24 GSTL 55 (Tri. -Bang.). The appellant further relied upon its own earlier decision in Final Order No.21586/2017 dated 10.08.2017 and contended that the extended limitation period was not invocable.
The Revenue supported the impugned order and maintained that the services received were taxable Intellectual Property Rights Services.
CESTAT Bangalore examined the Technical License Contract Agreement and found that the royalty payments were consideration for technical documentation and know-how. The agreement did not grant the appellant rights or claims concerning trademarks, trade names, model rights, design rights or other specified intellectual property. The Tribunal also noted the Board’s clarification that only intellectual property rights covered under Indian law were chargeable to service tax under the relevant provision.
