2015 (9) TMI 215

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..... eceived by them as royalty from M/s. Dhariwal Industries Ltd. for the use of trade name/brand name on the products which were manufactured and cleared consequent to an agreement dt. 20.4.2004. Revenue authorities were of the view that as per the terms and conditions of the above mentioned agreement, M/s. 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 an .....

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..... hich has been paid for the period in question i.e. 1.4.2004 to 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 8.9.2005 and appellant could be ineligible for the exemption granted by Notification No. 18/2004-S.T. He would reiterate the findings of the lower authorities. 5. We have considered the su .....

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..... ed 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 10.9.2004 were done so after calculating the correct sales turnover on finalization of the Balance Sheet on 8.9.2005. It is undisputed that during the period, no service tax was leviable on Intellectual Property Services, as the said services came into the statute w.e.f. 10.9.2004. 8. In our considered view, both the lower authorities have erred in coming to a conclusion that appellant is liable to .....

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