2018 (5) TMI 1365 - AT - Service Tax

Liability of service tax of Bureau of Indian Standards (BIS) - Technical Testing and Analysis Services - excess charges received by the appellant - It appeared to the department that the amounts have been received by appellants from the customers which are in the nature of advances and the appellant is liable to pay service tax on the same - Held that - whenever any amount is received at the first instance from any client, appellant discharges the tax liability on that amount on cum tax basis. There is no allegation that higher amount than what is charged to customer in respect of marking charges has been collected - the issue of credit notes is therefore only an accounting transaction to recognize the liability of the appellant towards their customer to know the excess payment lying with them. It has to be kept in mind that BIS is set by the Government of India with the Governing Council and Members consisting of Ministers and Members of Parliament and Secretaries of concerned Departments. There is also no allegation that BIS have not discharged tax liability on the initial amount received by the clients - demand set aside. Demand on tax in respect of royalty charges - Held that - the matter has already been decided by this Bench in respect of very same assessee BUREAU OF INDIAN STANDARDS VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2018 (4) TMI 1106 - CESTAT CHENNAI , where it was held that the Hallmark is worldwide recognised quality mark and not an Intellectual Property Right of appellant. BIS Act is for consumer protection, not dealing with Intellectual Property Right. The appellant is not permitting anybody to use Hallmark , in the manner trade marks are assigned/permitted for use - demand do not sustain. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax demand on amounts in suspense account.
2. Service tax demand on royalty charges collected from assayers for Hallmarking.

Analysis:

1. Service Tax Demand on Amounts in Suspense Account:
The case involved a dispute regarding the service tax demand on amounts held in the appellant's suspense account. The Bureau of Indian Standards (BIS) was registered for providing Technical Testing and Analysis Services. The department alleged that the amounts in the suspense account were advances received from customers, making the appellant liable to pay service tax. The original authority confirmed a tax liability of ?3,29,722 with interest and penalties, which was upheld by the lower appellate authority. The appellant contended that excess payments received from customers were accounted for through credit notes, recognizing liabilities towards customers without affecting the service tax already paid to the government. The tribunal accepted the appellant's explanation, ruling that the credit notes were merely an accounting transaction and did not nullify the service tax already paid. The tribunal found in favor of the appellant, setting aside the demand related to excess charges received.

2. Service Tax Demand on Royalty Charges:
The second issue pertained to the service tax demand on royalty charges collected by the appellant from assayers for Hallmarking. The appellant argued that the demand was unjustified as the issue had already been decided in their favor in a previous tribunal order. The tribunal referred to the earlier order, which clarified that the hallmarking activity did not involve any Intellectual Property Right service as per the Finance Act, 1994. The tribunal noted that the hallmark was a quality mark and not an Intellectual Property Right of the appellant. It was established that the appellant was not providing any Intellectual Property Right service, and the demand on royalty charges was deemed unsustainable. Consequently, the tribunal allowed the appeal with consequential relief, if any, as per the law.

This detailed analysis of the judgment highlights the key arguments presented by the parties, the tribunal's reasoning, and the ultimate decision rendered on each issue raised in the case.