The registration of a logo under the Copyright Act, 1957, as an artistic work is exempt from service tax liability under the Finance Act, 1994. The Customs, Excise and Service Tax Appellate Tribunal, Chennai (“CESTAT”), sets aside the impugned order of the Commissioner of Service Tax, holding that the Respondent’s service tax demand was unsustainable as the royalty received by the Appellant for the use of his logo does not qualify as taxable IPR services given under Section 65(55b) read with Section 65(105)(zzr) of the Finance Act.
The dispute arose when the M/s T.T. Krishnamachari & Co. (“Appellant”), a partnership firm that engaged in trading and distribution, developed and owned the “TKK” logo, registered as an artistic work under the Copyright Act, 1957. The firm permitted its group companies to use the disputed logo on their product packaging, in return for receiving royalty income. The Service Tax Department (“Respondent”) treated this royalty as consideration for providing IPR services and hence issued two separate Statements of Demand (SOD) for the period April 2013 – March 2014 and April 2014 – March 2015, requiring payment of service tax on royalty income. The Respondent contended that the Appellant’s logo lacked any real artistic character and could not legitimately qualify as a copyrighted work. According to the Department, the logo was being used in practice as a trademark to identify goods in the market and, on that basis, the royalty earned from its use should be treated as consideration for a taxable intellectual property right service.
The CESTAT referred and concurred with the order dated 19.03.2025 passed by the coordinate bench of this tribunal in the Appellant’s own case for the earlier period. In its earlier order, the bench, while adjudicating in favour of the appellant, distinguished between the terms “House mark” and “Brand name”, expounding that the former is a mark used to identify the manufacturer or distributor without establishing any nexus between the mark and a specific product, whereas, the latter identifies and distinguishes a particular product in the market. In the present case, the impugned logo merely projected the corporate identity of the group companies and did not serve as a product identifier, since the goods were sold under independent trademarks.
Considering the contention of the Respondent, the bench observed that the logo in question had been duly registered by the competent copyright authority following the prescribed statutory process, and such registration could not be brushed aside. The Tribunal declined to delve into an assessment of the logo’s artistic merit, holding that this was not open to re-examination at the adjudicatory stage. Consequently, the appeal was allowed, the logo was held to be exempt from service tax under the applicable law, and the order passed by the Commissioner of Service Tax was set aside.
Appearance:
For Appellant: Ms. G. Vardini Karthik, Advocate
For Respondent: Ms. Anandalakshmi Ganeshram, Authorised Representative
