SERVICE TAX ON ROYALTY

[RAM SHARMA]

DEAR EXPERTS,

I HAVE TWO QUERIES.

1. SHOULD WE PAY SERVICE TAX ON ROYALTY PROVISION BASIS OR PAYMENT BASIS UNDER REVERSE CHARGE MACHENISM.

2. WE HAVE PAID SERVICE TAX ON ROYALTY THROUGH CENVAT CREDIT BUT UNDER REVERSE CHARGE MACHENISM SERVICE TAX DEPARTMENT RAISE A DEMAND THAT WE SHOULD PAY SERVICE TAX ALONWITH INTEREST FROM 2007. WE ARE READY TO PAY SERVICE TAX CASH BUT WHY WE DO PAY INTEREST.ULTIMATELY WE HAVE PAID SERVICE TAX WHEATHER IT IS CENVAT CREDIT BUT NOT CASH.

PLEASE ADVICE HOW CAN WE SAVE OUR INTEREST.

THANKS

AI Summary

Service Tax on Royalty: Pay in Cash Under Reverse Charge, Not via CENVAT Credit; Explore Judgments for Interest Issues. A forum participant inquires about the payment of service tax on royalty under the reverse charge mechanism, questioning whether it should be paid on a provision or payment basis. They also express concern about a demand from the Service Tax Department for interest on service tax paid via CENVAT credit since 2007. Responses indicate that service tax on royalty should be paid in cash under the reverse charge mechanism, not through CENVAT credit, and suggest exploring favorable judgments to contest the interest demand. Another response highlights that reverse charge payments cannot utilize CENVAT credit, complicating the recovery of the utilized amount.