License Agreement Granting Exclusive Right to Use with Control Considered Deemed Sale Under Article 366(29A)(d): CESTAT Sets Aside Service Tax Demand

The CESTAT has ruled that a license agreement granting exclusive rights to use a product, with control over its use, should be considered a deemed sale under Article 366(29A) of the Constitution. This ruling clarifies the classification of such agreements under service tax law. It affirms that such agreements, despite being termed as licensing or service contracts, are essentially transfers of rights over property and should be treated as a sale of goods. As a result, the demand for service tax on the license fee was set aside. This decision has implications for the taxation of intellectual property rights and licensing arrangements.