2026-VIL-1759-CESTAT-KOL-ST
  1. Home
  2. 2026-VIL-1759-CESTAT-KOL-ST

SERVICE TAX CESTAT Cases

Service Tax - Taxability of Royalty received by partners from partnership firm for use of trade mark - Appellants were partners of a partnership firm engaged in manufacture of Biri and co-owners of the registered trade mark used by the firm, and the Royalty was accounted as expenditure in the Profit and Loss account with the net profit shared in the same proportion - Show Cause Notice alleged that the profit sharing of Royalty amounts to Intellectual Property Service, and the demand was confirmed by the Adjudicating authority and upheld by the Commissioner (Appeals) - Whether Royalty received by the partners from the partnership firm for use of the trade mark owned by them is liable to service tax - HELD - The trade mark is an individual asset of each of the partners, which they have deployed to generate profit for the business. This is not a case where a third party holding the trade mark has lent the same and has charged Royalty for the same. When the partner allows his assets to be used by the partnership firm, there arises no case of client - service provider relationship, and the same amounts to self-service by the partner for the partnership firm. Whatever a partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest, and no consideration is fixed as a quid pro quo for any particular service. Applying the ratio of the decision of the Mumbai Bench, which echoes the Apex Court's decision that a partnership firm is only a compendium of its partners, there is complete absence of service provider vis-à-vis service receiver relationship - The impugned order is set aside and the appeals are allowed.rnrn^Invocation of extended period of limitation on Royalty received by partners from partnership firm - Royalty was properly reflected in the Profit and Loss account, and the demand was confirmed for the extended period - Whether the extended period of limitation is invocable against the Appellants in the absence of suppression - HELD - The Appellants would have carried a bonafide belief that since they were recovering Royalty charges from the partnership firm, there is absence of service provider - client relationship, and the Revenue has failed to make out any case of suppression. Further, if service tax was payable by the Appellants individually, the same would accrue to the partnership firm itself as Cenvat Credit for payment of Excise Duty on its finished goods, and hence there cannot be any intent to evade service tax payment - The confirmed demand for the extended period is legally not sustainable and is set aside on account of time bar also.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?