1. Meaning and Scope

Intellectual property (‘IP’) refers to legal entitlements which are attached to certain types of information, ideas, or other intangibles in their expressed form. The holder of this legal entitlement is generally entitled to exercise various exclusive legal rights in relation to the subject matter of the IP. IP right owner(s) may sell, transfer, assign, licence or permit the right to use of IP to another person for a consideration. Vide Finance Act 2004, IP service has been brought within the ambit of service tax w.e.f. 10 September 2004 to tax the payments received/made toward transfer/acquisition of such rights.
Section 65(105) (zzr) of the Finance Act, 1994 (‘the Finance Act’) seeks to levy service tax on service provided to any person, by the holder of intellectual property right, in relation to intellectual property service.
As per Section 65 (55a) of the Finance Act, “intellectual property right” (‘IPR’) means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright.
As per Section 65 (55b) of the Finance Act, “intellectual property service” means,
(a) transferring temporarily; or
(b) permitting the use or enjoyment of any intellectual property right