Case Details: Future Brands Ltd. Versus Commissioner of Central Goods and Service Tax and Central Excise, New Delhi (2025) 31 Centax 82 (Del.)
Judiciary and Counsel Details
- Prathiba M. Singh & Rajneesh Kumar Gupta, JJ.
- S/Shri Kumar Visalaksh, Udit Jain & Ms Akanksha Dikshit, Advs., for the Petitioner.
- S/Shri Aditya Singhla, SSC with Ritwik Saha & Umang Misra, Adv., for the Respondent.
Facts of the Case
The petitioner filed a writ petition under Article 226 of the Constitution of India challenging an order passed by the Commissioner of CGST, raising the issue of whether activities concerning receipt of income for exclusive licensing of a brand attract payment of Service Tax or VAT. This was the second round of litigation. It was submitted that the issue had already been decided by the CESTAT in the earlier round, wherein it was held that right to use transactions would not be subject to Service Tax. The earlier dispute pertained to prior financial years.
However, under the impugned order, which relates to subsequent financial years, the Department took a contrary stand. The petitioner submitted that the Department, having accepted the earlier view of CESTAT, could not now take a different position. Attention was drawn to a specific finding in the impugned order which stated that the right to use had not been transferred absolutely and that effective control remained with the licensor, thereby classifying the transaction as a service. The matter was accordingly placed before the Delhi High Court.
High Court Held
The Delhi High Court held that the impugned order was appealable and that writ jurisdiction under Article 226 ought not to be exercised in light of the available alternative remedy. It observed that determination of whether the activity in question amounts to a service or falls within the scope of sale under Value Added Tax required an examination of the nature of the right transferred, the agreement terms, and the definition of ‘permitted use’ under Section 2(r) of the Trade Marks Act, 1999. Since such issues involved mixed questions of fact and law, the Court directed the petitioner to approach the CESTAT for adjudication. A period of 30 days was granted for this purpose.
List of Cases Cited
- Commissioner v. Future Brands — Service Tax Appeal No. 53304 of 2015, decided on 8-9-2022 by CESTAT, New Delhi — Referred [Para 5]
