Trade mark royalty and service tax classification were remanded for fresh adjudication after considering the binding circular and submissions.

Royalty received for permitting use of a trade mark was examined for service tax treatment under management consultancy service. The text states that the adjudicating authority had relied on the agreements, but the matter required reconsideration in light of the Board's circular dated 27 October 2008 and the assessee's submissions on the nature of those agreements. It also notes that fresh adjudication had to be preceded by an opportunity of hearing. On that basis, the impugned order was set aside and the matter remanded to the Commissioner for fresh decision.

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Issues: Whether the impugned order confirming service tax demand on royalty for use of trade mark should be set aside and the matter remanded for fresh decision in light of the Board's circular.

Analysis: The dispute arose from the treatment of royalty received for permitting use of trade mark as taxable under management consultancy service. The record showed that the adjudicating authority had proceeded on scrutiny of agreements and that the matter required reconsideration in the light of the Board's circular dated 27 October 2008, along with the submissions already made by the assessee. The adjudicating authority was also required to grant an opportunity of hearing before deciding afresh.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for fresh adjudication.

Ratio Decidendi: Where a tax demand is confirmed without considering a relevant binding circular and the assessee's submissions on the nature of the agreements, the proper course is to set aside the order and remand the matter for fresh decision after hearing the assessee.

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