Service Tax Not Payable On Royalty Received For Group Companies' Use Of Copyrighted Logo: CESTAT

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax is not payable on royalty received for group companies' use of the copyrighted 'TTK' Logo founded by T.T. Krishnamachari & Co. (assessee). Ajayan T.V. (Judicial Member) and Ajit Kumar (Technical Member) examined whether the demand of service for the 'TTK' logo of the assessee used by its group companies under Intellectual Property Rights service is tenable. In the case at hand, the assessee/appellant was a partnership firm dealing in Consumer Durables, Health care Products, etc., and was also engaged in trading, distributing, warehousing, and clearing and forwarding these products. The assessee had developed a logo 'TTK' which was registered as an 'Artistic Work' under the Copyright Act, 1957 and was permitted to be used by the group concerns on the packaging, cartons, containers, labels, brochures, literature and advertising materials in connection with products which it manufactures, sells or distributes. The Department was of the opinion that the assessee is required to pay service tax on the royalty income that it has received for permitting their group companies to use the logo 'TTK' as a trademark under the Intellectual Property Rights service. A show-cause notice was issued to the assessee, and the demand was confirmed in the adjudication order. The assessee filed an appeal challenging the order, which was dismissed. The Tribunal noted that the exemption Notification No. 25/2012ST dated 20.06.2012 has been amended by Notification No. 03/2013-ST dated 01.03.2013, whereby for entry 15, the following entry has been substituted, viz., “15. Services provided by way of temporary transfer or permitting the use of enjoyment of a copyright,- covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical or artistic works; or of cinematograph films for exhibition in a cinema hall or cinema theatre.” The bench opined that the benefit of the said entry would be available to the assessee/appellant. In view of the above, the Tribunal allowed the appeal. Case Title: M/s. T.T. Krishnamachari & Co. v. Commissioner of GST and Central Excise Case Number: Service Tax Appeal Nos. 40635 and 40636 of 2017 Counsel for Appellant/ Assessee: G. Vardini Karthik Counsel for Respondent/ Department: Anandalakshmi Ganeshram Click Here To Read/Download Order

Service Tax Not Payable On Royalty Received For Group Companies' Use Of Copyrighted Logo: CESTAT

Mehak Dhiman

Tags