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TMI Blog2013 (12) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... edit. The authorities at the service recipient's end has no jurisdiction to question the classification of service and the liability to service tax so long as the authorities having jurisdiction over the service provider's end do not dispute the same. Therefore, the impugned demand holding that the appellant has not received any input service and therefore nor eligible for any service tax credit is unsustainable in law - the entire demand is time barred. As early as in 2007, when the records of the appellant firm were audited by the department the payment of royalty to Shri Kelkar and receipt of service by the appellant was known to the department, and thereafter, on the advice of the department Shri Kelkar obtained service tax registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, no credit can be taken of the service tax paid on such IPR services. A statement of Shri.R.Rajangam, Chief Financial Officer of the company recorded under Section 14 of the Central Excise Act, also revealed that Shri G.D.Kelkar, as a Managing Director, was an employee of the company and was using the laboratory facilities of the company and the raw materials provided by the company to create a new products. Therefore, IPR, if any, belongs to the company and not to the individual and therefore, no IPR services have provided by Shri Kelkar to the appellant firm. Accordingly, a show-cause notice dated 03/01/2011 was issued proposing to deny the service tax paid on IPR services amounting to Rs.1,23,90,991/- under the provisions of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the royalty was paid to Shri G. D. Kelkar as per the decision of the Board of Directors of the company, inasmuchas Shri G.D. Kelkar had developed certain formulas and processes useful for the manufacture of the products by the appellant company. The department informed the appellant that the royalty payment attracted liability to service tax. Vide letter dated 26/06/2007 the jurisdictional Superintendent (Audit) of the Mumbai -III Commissionerate, issued a letter to the appellant directing them to pay service tax amounting to Rs.59,57,159/- plus interest being the service tax payable on amount of Rs.4,86,69,596/- paid to Shri G.D.Kelkar by way of royalty. In pursuance to the said direction, Shri G.D.Kelkar got himself registered with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. If that be so, the department cannot take the stand that the appellant did not receive any services and the credit taken by the services paid on IPR services is not an eligible credit. The Ld. Counsel contends that the taxability and the related issues of input service has to be decided by the departmental authorities having jurisdiction over the service provider and the authorities of the recipient factory cannot sit on judgement of these matters and relies on the decision of this Tribunal in the case of Ultratech Cement Vs. CCE, Nagpur - 2011 (22) STR 289, Prem Cables Pvt. Ltd., Vs. CCE, Nagpur - 2001 (127) ELT 400 (Tri - Del), CCE Vs. Purity Flexpack Ltd. (Gujarat High Court) - 2008 (9) STR 125. It is also contended that the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the strength of these invoices, the appellant company has taken credit. Once the appellant has received the services and has borne the incidence of service tax, the appellant is rightly entitled to the service tax credit. The authorities at the service recipient's end has no jurisdiction to question the classification of service and the liability to service tax so long as the authorities having jurisdiction over the service provider's end do not dispute the same. In a series of decisions, this Tribunal has held that departmental authorities having jurisdiction over the service recipient/manufacturer of final products cannot sit on judgements or decision over the excise duty/service tax paid by the input service provider or the input ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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