2023 (6) TMI 1245

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....., Netherlands, for obtaining the licence to use the know-how, formula and trademarks for the manufacture, packing, sale and distribution of personal care products in India, for which the appellant had obtained firm permission from the Reserve Bank of India for payment of Royalty for the licence of know-how, formulae and trademarks, as above, under the Foreign Exchange Regulations Act, 1973. * The effect of the above agreement appears to be that the foreign company would be getting a Royalty fee equal to five per cent (5%) of the Net Sales Value of all marked products sold by the appellant, which, according to the Revenue, would fall under the category of "consulting engineers" as defined under the statute, for which reason the appellant was liable to pay Service Tax. * It also appeared to the Revenue that in terms of the above licence agreement, the Royalty payments would have to be borne by the Indian company, i.e., the appellant. * Revenue also entertained a doubt that with effect from 16.08.2002, Rule 2 of the Service Tax Rules, 1994 was amended by Notification No. 12/2002-S.T. dated 01.08.2002 whereby, a new clause was inserted under sub-rule (1) to the said Rule and the....

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....ging Section 66A of the Finance Act, 1994, for the levy of Service Tax on the services provided by a foreign service provider, was enacted only from 18.04.2006. The appellant has relied on the decision in the case of M/s. Indian National Shipowners Association v. Union of India [2009 (13) S.T.R. 235 (Bom.)] which came to be approved by the Hon'ble Supreme Court [2010 (17) S.T.R. J57 (S.C.)] 5.2 Learned Advocate invited our attention to paragraph 17 of the impugned order and submitted that Rule 6(1) of the Service Tax Rules, 1994, provided for the Service Tax only on the receipt of the value of taxable service, which came to be amended as per Notification No. 07/2005-S.T. dated 01.03.2005, referred to the second proviso to sub-rule (1), to contend that notwithstanding the time of receipt of payment towards value of service, no Service Tax is payable for the part or whole of the value of services which is attributable to the services provided during the period when such services were not taxable. 5.3 He would conclude his argument, urging that the impugned demand, for the reason that the taxable event was not the provision of service, but the date on which the value for taxable ser....

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....ducts v. C.C, CE [2018 (7) TMI 308 - CESTAT, Chennai] (e) LG Balakrishnan & Bros. v. Commissioner of Central Excise [2018 (10) TMI 1470 - CESTAT, Chennai] (f) Scope E Knowledge Center Pvt. Ltd. v. Commissioner of Service Tax, Chennai [2023 (3) TMI 695 - CESTAT, Chennai] (g) Vedanta Ltd. v. Commissioner of C.Ex., Tirunelveli [2019 (28) G.S.T.L. 258 (Tri. - Chennai)] 6. Per contra, learned Additional Commissioner has relied on the findings of the lower adjudicating authority. She would specifically invite our attention to paragraph 20 of the Order-in-Original wherein the lower authority has held that in the earlier year i.e., 2007-08, there was no actual payment of Royalty, but only book adjustments were made and the liability arose only for the services provided after 10.05.2008. There is also a recording of admission as to the payment of Service Tax by the appellant, which was referred to by the learned Additional Commissioner, to highlight that the appellant had voluntarily made the payment after understanding its liability to Service Tax. 7. We have heard the rival contentions, we have perused the documents placed on record and we have also gone through the decisions of v....

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....Tax Rules, 1994, which provides that the Service Tax is payable only on receipt of the value of taxable service, was amended vide Notification No. 07/2005-S.T. dated 01.03.2005 and the amendment reads as follows: - "5. In the said rules, in rule 6, for sub-rule (1), the following sub-rule shall be substituted, namely : - "(1) The service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable services : Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the quarter in which the payments are received, towards the value of taxable services : Provided further that notwithstanding the time of receipt of payment towards the value of services, no service tax shall be payable for the part or whole of the value of services, which is attributable to services provided during the period when such services were not taxable : Provided also that the service tax on the value of taxable services received ....