Tribunal Exempts T.T. Krishnamachari & Co. from Service Tax on Copyrighted Logo

CESTAT Chennai Bench rules in favor of T.T.Krishnamachari & Co., setting aside service tax demand on royalty income from copyrighted 'TTK' logo.

In a significant ruling, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) Chennai Bench has quashed the service tax demand levied on T.T. Krishnamachari & Co. regarding their 'TTK' logo. The tribunal held that the logo, registered as an artistic work under the Copyright Act, 1957, is exempt from service tax under Intellectual Property Right (IPR) services, thereby overturning the Orders-in-Original issued by the Adjudicating Authority.

The appellants, a partnership firm dealing in consumer durables and healthcare products, had been subjected to service tax on the royalty income earned from permitting their group companies to use the 'TTK' logo. The Department contended that the logo functioned as a trademark, thus falling under IPR services liable for service tax. However, the tribunal found that the logo's registration as an artistic work under the Copyright Act exempts it from being classified as a trademark for service tax purposes.

The tribunal emphasized the distinction between a house mark and a product mark, underscoring that the 'TTK' logo serves as a house mark identifying the manufacturer rather than establishing a product relationship. The bench, comprising Mr. M. Ajit Kumar (Member Technical) and Mr. Ajayan T.V. (Member Judicial), reiterated that the service tax demand was unsustainable, aligning with judicial precedents, including prior decisions in the appellant's favor.

This decision highlights the nuanced interpretation of intellectual property laws, setting a precedent for similar cases where copyrighted works are mistaken for trademarks. The tribunal's judgment provides clarity on the application of service tax exemptions, ensuring that copyrighted artistic works are not unjustly taxed under IPR services.

Bottom Line:

Service Tax - Demand under Intellectual Property Right (IPR) service for royalty income on copyrighted logo - Held, exemption under Notification No. 25/2012-ST as amended by Notification No. 03/2013-ST applicable - 'TTK' logo registered as an artistic work under Copyright Act, 1957 not liable for service tax under IPR services - Demand set aside.

Statutory provision(s): Copyright Act, 1957, Notification No. 25/2012-ST, Notification No. 03/2013-ST, Finance Act, 1994, Trade Mark Act, 1999.

M/s. T.T.Krishnamachari & Co. v. Commissioner of GST and Central Excise, (CESTAT)(Chennai)(Regional Bench) : Law Finder Doc Id # 2818751