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2015 (9) TMI 1097 - AT - Service TaxValuation of taxable service - associated enterprise - booking of royalty every month has a credit and debit entry just as the reversal at the end of each quarter - Intellectual property service - payment of royalty towards receipt of technical know-how service for manufacturing of Motor Vehicle - reverse charge mechanism - Held that:- This is not a dispute about taxability. Tax liability has been discharged by the appellant, albeit in a schedule of their own choosing, relying on the principle of "receipt" of consideration by the service provider. As this happens to be at variance with the provisions of Rule 6 of Service Tax Rule, 1994 and Rule 7 of Point of Taxation Rules, 2011, the tax liability needs to be computed for each month on the amount booked in the "royalty accrued" account with the reversal being taken into account whenever that has occurred. As the taxes have been discharged during the period under dispute, the appellant's liability is limited to interest for the first two months of each quarter to the extent of amount not paid or short-paid. This should have been effected in the impugned order but, not having been done, needs to be remedied. In the circumstances of discharge of tax liability by the appellant, there is no justification to invoke the extended period and consequent penal provisions under section 78 of Finance Act, 1994. Penalty under section 77 of Finance Act, 1994 is also set aside. The penalty under section 76 of Finance Act, 1994 is set aside as there is no tax due on the date of notice. - Decided partly in favor of assessee.
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