2008 (11) TMI 86 - AT - Service Tax

Manufacturer gives consent to another manufacturer for use of his trade mark and realises the amount (Royalty) - Demand under the category of Management Consultancy Service on the amount of Royalty appellant submit that the activities come within the purview of Intellectual Property Service which was introduced in 2004 - matter is required to be examined in the light of the Board s Circular 249/1/2008-CX 4 dt. 27 October 2008 matter is remanded back to the Commissioner to decide afresh

Summary

Issues:
Service tax liability on 'Royalty' received for the use of 'Trade Mark' under 'Management Consultancy Service'.

Analysis:
The appellants, engaged in manufacturing Alcoholic Beverages, were alleged to have failed to pay service tax on the 'Royalty' received for the use of their 'Trade Mark'. The demand was made under the category of 'Management Consultancy Service' based on a Trade Notice from Madurai Commissionerate. The adjudicating authority confirmed the tax demand and imposed a penalty.

The main contention raised was that the issue had already been addressed in a Board Circular dated 27th October 2008, classifying such activities under 'Intellectual Property Service' introduced in 2004 for 8 agreements. The appellant argued that the remaining 9 agreements should be treated as 'Business Auxiliary Services'. The Commissioner decided the matter based on certain agreements presented by the appellant during the proceedings, prompting the need for a re-examination by the adjudicating authority in light of the Board's Circular.

Consequently, the Tribunal set aside the impugned order and remanded the case back to the Commissioner for a fresh decision, emphasizing the consideration of the Board's Circular and the appellant's submissions. The adjudicating authority was instructed to provide a proper opportunity for a hearing before reaching a decision. The appeal was allowed for remand, ensuring a fair process for further determination.