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M/s. R.M. Dhariwal (HUF) Versus Commissioner of Central Excise, Pune-III

2015 (9) TMI 215 - CESTAT MUMBAI

Demand of service tax - Receipt of royalty - Held that:- both the lower authorities have erred in coming to a conclusion that appellant is liable to pay the service tax. if amount which is paid for as royalty and remains undisputed, the said amount of royalty cannot be covered under the Intellectual Property Service which came into tax net from 10.9.2004. It is seen from the records that the lower authorities have sought to recover the service tax liability from the appellant by invoking the pro .....

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unt received by the appellant during the period 20.4.2004 to 10.9.2004. - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. - Appeal No. ST/252/2009-Mum - Dated:- 15-4-2015 - Mr. M. V. Ravindran, Member (Judicial) And Hon ble Mr. P. S. Pruthi, Member (Technical),JJ. For the Appellant : Shri Mayur Shroff, Advocate For the Respondent Shri D. Nagvenkar, Additional Commissioner (A.R) ORDER Per : M.V. Ravindran This appeal is directed against Order-in-Appeal .....

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Dhariwal Industries Ltd. is required to pay royalty to the appellant at a fixed rate of 3% of Net sales on the basis of audited annual reports. On scrutiny of the audited Balance Sheet for the year ending 31.3.2005, it was noticed that the appellant had issued two invoices for the receipt of the royalty for the period 1.4.2004 to 10.9.2004 and did not discharge the service tax liability. Show cause notice was issued which was adjudicated and demand of the service tax liability was confirmed alo .....

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ions that the question involved in this case is whether the service tax liability would be required to be discharged for the period 1.4.2004 to 10.9.2004 under the category of Intellectual Property Services . He would submit that the said services were brought into service tax from 10.9.2004. He would submit that both the lower authorities have incorrectly appreciated the facts, as the service tax liability arises on the appellant even for the royalty amounts, which were paid for the period in q .....

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10.9.2004 though settled in 2004-2005 and hence only tax net. 4. Ld. A.R. on the other hand, would draw our attention to the Notification No. 18/2004-S.T. and submit that the said notification specifically states service tax liability would not arise on the appellant to that portion of the value of taxable service which is received by the service provider from the customer prior to 10th day of September 2004. He would then submit that the balance sheet for the year 2004-2005 was finalized on 8. .....

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e amount which has been received by the appellant during material period in question was as royalty for the use of the brand which is registered in the name of the appellant assessee. 7. We peruse the agreement entered by the appellant with M/s. Dhariwal Industries Ltd. The said agreement assigned brand/trade name M/s. Dhariwal Industries Ltd. for a period of 4 years i.e. 20.4.2004 to 31.3.2008, specific articles of the said agreement, which need to be read is the consideration to be paid by M/s .....

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Sales The Net Sales shall include all indigenous Sales, Exports Sales (including Sales to RMD (HUF)). (3) DIL shall render to RMD (HUF) the audited annual reports following the close of each Financial Year, on the basis of which royalties are payable under this agreement. DIL shall pay to RMD (HUF) the amount of Royalty payable within 3 months from audited annual reports. It can be noticed from the above reproduced articles of the agreement, the royalty which are paid from 20.4.2004 to 10.9.200 .....

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