TaxTMI 
TaxTMI 
2026 (7) TMI 1945
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....securities/units, providing loans against security/pledge and activity of professional and advisory services. The Appellant was duly registered with the Service Tax authorities under the taxable category "Banking and Financial Services" and was duly paying service tax on a self-assessment basis. Further, the Appellant also received various input services which was required for the provision of various output services and as such availed CENVAT Credit of service tax on such services. 2.1 During the relevant period, the appellant entered into the following key transactions: (i) Invested in Venture Capital Fund ("VCF") units of Adharshila Venture Capital Fund Limited ("AVCFL") of face value of Rs.5,00,000/-and received profit from investment of Rs.4,97,16,954/-pursuant to an investment agreement dated 19.07.2007 which would also be clear from letter dated 31.03.2008 issued by AVCFL. Separately provided asset management services to AVCFL under a management advisory agreement and paid service tax on the management fees charged. For reporting purposes, the said amounts were classified together under the heading "Investment Banking Revenue" in the Books of Accounts. (....
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.... being in the nature of original literary work in terms of Section 13(1)(a) of Copyright Act, 1957, which is statutorily excluded from Service Tax. The Ld.Commissioner, vide its Order-In-Original dated 24.03.2014, dropped a substantial portion of the proposed demand but erroneously confirmed the Service Tax demand of Rs.61,45,016/- on the profit from investment and Rs.3,74,344/- on the royalty income. Furthermore, the impugned Order disallowed CENVAT credit amounting to Rs.71,713/- while also confirming the recovery of applicable interest under Section 75 and imposing penalties under Sections 77 and 78 of the Finance Act, 1994. 2.5 Against the said order, the appellant is before us. 3. The ld.Counsel for the appellant submits that the income/profit from investment earned by the Appellant is not towards any taxable service provided by the appellant and is distinct from the management fees charged by the appellant from AVCFL. He submits that a sum of Rs.4,97,16,954/- recorded by the appellant as Investment Banking Revenuefor the FY 2007-08 pertains to profit received from sale of units held in AVCFL. The VCF operates by pooling capital from various investors (unit holders) and ....
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....Ms. Consolidated Construction Consortium Ltd. [2025 (11) TMI 603]. 3.3 Further, he submits that it is a settled law that services tax demand cannot be raised in a mechanical manner only on account of difference between the books of account and ST-3 returns. ;Reference in this regard is invited to the judgment of the Hon'ble CESTAT Kolkata in the case of Saraf Services Pvt. Ltd. vs. CST, Kolkata[(2025) 26 Centax 54 (Tri.-Cal)]. 3.4 It is further submitted that the royalty received by the Appellant is essential towards permitting towards use of copyright which was specifically excluded from the definition of Intellectual Property Rights and as such was not taxable. He submits that the Ld. Commissioner has erroneously classified the royalty received from PRP Technologies Ltd. as a taxable "Intellectual Property Service" under Section 65(105)(zzr) of the Finance Act, 1994. The charging section relies on the definition of "Intellectual Property Right" provided under Section 65(55a) of the Act, which explicitly states: "intellectual property right' means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under ....
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....taxable service under Section 65(105)(zzzzt) of the Finance Act, 1994 (w.e.f. 01.07.2010), the legislature deliberately excluded rights covered under Section 13(1)(a) of the Copyright Act, 1957. Section 13(1)(a) covers "original literary, dramatic, musical and artistic works". The CBEC Circular D.O.F. No. 334/1/2010-TRU dated 26.02.2010 also explicitly clarified that original literary works are kept out of the tax net to encourage creative works. Therefore, the royalty derived from a computer programme (a literary work) is not taxable under any category of the Finance Act, 1994. 3.8 The ld. Counsel further submits that the Ld.Adjudicating Authority has erroneously denied the substantive right of CENVAT Credit on arbitrary, procedural and hyper-technical grounds. The appellant submitted all the relevant documents/invoices/bills towards its claim of CENVAT Credit during the course of the adjudication proceedings. In spite thereof, the Ld. Ld.Commissioner has disallowed CENVAT credit of Rs.71,713 on hyper-technical grounds such as alleged non-submission of documents, mismatch of addresses, and invoices being issued in the name of key managerial personnel. It is a well-settled princ....
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.... 22 Centax 495 (Tri.-Cal)] 3.10 Again, he submits that when the entire demand has been computed on the basis of difference between the S.T.-3 Return and income as per the audited Balance Sheet/Profit & Loss Account, extended period of limitation is not invokable. In this regard, he relies on the following decisions : (i) M/s Saraf Services Pvt. Ltd. vs. CST, Kolkata[(2025) 26 Centax 54 (Tri.-Cal)]. (ii) M/s PHI Seeds Pvt. Ltd. Vs. Commissioner of Service Tax, Hyderabad [2026 (6) TMI 1423 (Tri. - Hyd.)]. Finally, he prays for setting aside the impugned order by allowing their appeal with consequential benefits. 4. The ld.A.R. for the Revenue has justified the impugned order. Regarding short payment of Service Tax in respect of Asset/Fund Management Services, he submits that scrutiny of Books of Accounts and ST -3 revealed Short Payment of Service Tax under the category of Banking and other Financial Services. During audit, it emerged that the assessee suppressed income to the tune of Rs.4,97,16,954/- earned from management of Adharshila Venture Capital Fund for the period 2007-2008. Such activity constituted Asset Management/Fund Management Service, taxabl....
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....isclosed substantially lower amount leading to a difference of Rs 4,97,16,954/- resulting in Short payment of ST to the tune of Rs 61,45,016/-. The disclosure made by the assesse in their books and ST3 thus appears misleading. 4.5 In respect of invocation of extended period, he relies on the following decisions : (i) M/s B Electrical Company vs Pr. Commissioner of CGST & ST, Dehradun 2024 (8) TMI 786 CESTAT NEW DELHI ; (ii) M/s Mayank Foods & Beverages Pvt. Ltd. 2026 (1) TMI 851 CESTAT-Allahabad ; 4.6 In respect of burden of proof, he relies on the decision of the Hon'ble High Court of Madras in the case of Computer Access Pvt. Ltd. Vs. The Commissioner of Central, Excise and Service Tax, Chennai [2026 (6) TMI 1369 MADRAS HIGH COURT] where the Hon'ble High Court accepted the Tribunal's reading of the work order and held that the appellant was engaged for managing and maintaining leased lines for consideration on a per-circuit, per-year basis. On a plain reading of the work order and the relevant tax entry, the activity squarely fell within Management, Maintenance and Repair service. The plea that the appellant was only rendering an insignificant part of ....
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....nalties under Section 77 & 78 of the Finance Act, 1994, are imposable on the appellant or not ? Issue No. (5) Whether in the facts and circumstances of the case, the extended period of limitation can be invoked or not ? Issue No. (1) Whether the service tax can be demanded from the appellant under the category of "Banking and Financial Services" on the income earned on investment in units of M/s Adharshila Venture Capital Fund Limited on the basis of their financial records or not ? 7. For better appreciation of facts, we find that the appellant has placed on record the investment agreement between the Appellant and M/s Adharsila Venture Capital Fund Limited and as per the said Agreement, the relevant terms are as under : "1. That Microsec holds the units in the Venture Capital Fund having a face value of Rs.5,00,000 (Rupees five lacs only)each. 2.............................................................. 3. That Adharshila shall pay profit on investments against the units held by Microsec till the end." and the service showing profit earned by the appellant is also extracted herein below : 8. It is also a fact on recor....
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.... Service" on Royalty received for permitting the use of copyright. We find that the "Intellectual Property Service" has been defined under Section 65(55a) of the Act, which is as under : " 'intellectual property right' means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright." As per the "Intellectual Property Service", the copyright is excluded from the taxable service. In this case, the demand of service tax has been confirmed against the appellant shown as Royalty received by the appellant. The permission to use of their copyright to M/s Gulmohar Advisors Pvt. Ltd. was given vide Agreement dated 28.03.2009. 12. We further take note of the fact that the payment of Royalty has been made as per the Agreement dated 1st April, 2009 between the Appellant and PRP Technologies Limited. The terms of the agreement for payment of Royalty is as under : "B. Gulmohar has transferred the Copyright of PRP Concept and PRP-SRS to MFSL through an agreement dated 28th March, 2009. C. Gulmohar has also through an agreement dated 30t....
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....t is an admitted position that the appellant has availed cenvat credit on payment of service tax by supplier of service, which is not disputed by the Revenue. In this regard, this Tribunal in the case of M/s Scorpion Express Pvt. Ltd. (supra), held that the disputed invoices were issued in the names of the appellant's operating divisions, later covered by centralized registration, and that the services covered by those invoices were received for the appellant's business and accounted for in its books. Therefore, it was held that the substantive cenvat credit could not be denied on mere procedural or clerical discrepancies in invoice names when receipt of services, payment of tax by the provider and use for output services were not disputed. Admittedly, in this case also, the cenvat credit sought to be denied for non-submission of documents, mis-match of invoices, which are in the name of key managerial personnel, but admittedly, it is not disputed by the Revenue that the said services availed by the appellant on payment of service tax by the service provider and the same has been used for payment on output services provided by the appellant and the said service was received by the ....