CESTAT Bangalore rules Volvo Buses royalty payments are not taxable IPR services

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Bangalore has ruled that royalty payments made by Volvo Buses (India) Pvt Ltd to its parent company, Volvo Bus Corporation in Sweden, are not taxable as Intellectual Property Rights (IPR) services.

The dispute centered on whether payments under a “Technical License Contract Agreement” fell under taxable IPR services. The Tribunal found that the royalties were consideration for technical documentation and know-how required for manufacturing, assembly, and quality control, rather than for trademarks, designs, or patents recognized under Indian law.