2014 (2) TMI 409 - AT - Service Tax

Waiver of pre-deposit - application for modification of stay order - Royalty charges - Intellectual Property Right Services - Whether applicant is liable to pay service tax on royalty charges paid to foreign company as service recipient under Intellectual Property Right Services - Held that - Prima facie, it appears from the record that applicant paid royalty to the foreign company. no royalty payment was made by applicant has been considered in the stay order - Extension for period of compliance granted - Decided partly in favour of assessee.

Summary

Issues:
1. Modification of Stay Order
2. Liability to pay service tax on royalty charges to a foreign company

Analysis:
1. The judgment pertains to an application for the modification of a Stay Order issued on 20.2.2013, requiring the applicant to deposit Rs.5 lakhs within 4 weeks. The Tribunal had directed this deposit in response to a tax demand of Rs.20,06,895/- along with interest and penalties. The applicant contested the stay order, claiming a factual error regarding the payment of royalty charges to a foreign company. The Tribunal, after reviewing the facts and records, found no merit in the applicant's claim and upheld the original directive. However, the Tribunal extended the compliance period to 4 weeks from the date of the judgment.

2. The key issue in this case revolved around the liability of the applicant to pay service tax on royalty charges paid to a foreign company as a service recipient under Intellectual Property Right Services. The applicant argued that no royalty payment was made, contrary to the records indicating otherwise. The Tribunal examined the annexure to the show cause notice, which supported the position that the applicant had indeed paid royalties to the foreign company. Despite the applicant's contentions, the Tribunal found no merit in the application for modification. The Tribunal emphasized that the applicant must comply with the original Stay Order within the extended 4-week period and report compliance by a specified date.

In conclusion, the judgment reaffirmed the original Stay Order's directive for the applicant to deposit Rs.5 lakhs within a revised compliance period, dismissing the application for modification based on the applicant's challenge regarding royalty payments to a foreign company.