royalty- Intellectual property service

[jitendra Gupta]

an agreement done for payment of royalty on total sales made during the year @ 3%. Royalty worked out Rs. 1.70 crore on total sales made during the year 2007-08. But the payment of royalty was made after 24.2.2009. So at which rate (10% or 12%) service tax payment has to be made? The royalty pertains for sales of 5 units, so credit should be equally or on the basis of sales value distributed to each unit or one unit can availed entire credit?

AI Summary

Service tax rate applicability determined by date of provision or accrual, not payment, for royalty transactions.
Service tax rate for royalty is determined by the date the service was provided or the royalty accrued, not by the later payment date. For cenvat credit, a consolidated payment may be allocated among units by any reasonable method, and an Input Service Distributor registration is the appropriate mechanism to pass on common service tax credit.