Meaning of intellectual property :
Interestingly, the term ‘Intellectual Property Right’ (IPR) has not been defined in GST Law. MF(DR) circular No. B2/8/2004-TRU dated 10-9-2004 states as follows – Intellectual property emerges from application of intellect, which may be in the form of an invention, design, product, process, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs.
Permission to allow brand name – In ‘brand licensing arrangement’, the brand owner merely provides technical services and grants permission for use of the brand name. Property, risk and reward of product manufactured rests with the licensee/manufacturer and not the brand name owner. In such case, the Brand Owner is providing ‘Intellectual property Service’ to licensee/manufacturer and the brand owner will be liable to pay service tax (now GST) .- CBE&C letter No. 249/1/2006-CX.4 dated 27-10-2008 [20 STT 16 (St)] [clarification in respect of alcoholic liquor, but principle applies in all cases].
In Hero Honda Motors v. CST (2012) 35 STT 417 = 21 117 = 54 VST 300 (CESTAT), assessee had given permission to oil companies to use his trade mark on oils, lubricants and greases manufactured by the oil companies. It was held that this is IPR service.
GST payable if there is transfer of goodwill with trade mark for limited period ? – In Tata Global Beverages v. CST (2014) 45 GST 674 = 45 506 (CESTAT), assessee transferred goodwill ofk business with trade mark for 30 years. Assessee had reserved right of termination. A prima facie view was held that it is Intellectual property Right (IPR) and taxable [Assessee had argued that it was slump sale of ongoing business, but it seems only intangibles were allowed to be used for specified period with right of termination].