Service tax issue

Harsh Bhatia (AGM)     18 December 2014

Harsh Bhatia
 24 points

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Greetings of the day.

I have never dealt in Service Tax and hence have a concern and would appreciate receiving expert opinions of the fellow members. 

  1. My Company has entered into Royalty Agreement with a partnership firm for use of the registered TM logo for a period of 5 years.
  2. Company is using the logo which is registered in the name of firm and paying royalty to firm for the use on half yearly basis. 1st October 2014 was the first such payment.
  3. The directors in the company and partners in the firm are same persons.
  4. Rate of Royalty payment is clearly mentioned in the agreement entered into between both the organizations.

Can you kindly educate me on the following questions:

  1. Will Royalty be covered under Service Tax or Delhi VAT?
  2. If under Service Tax, will the tax be charged on reverse mechanism basis or not?
  3. Can company claim Input Credit for the service tax paid for royalty and adjust against liability of ST on commission income from abroad on goods sold?

Look forward to hearing from you all to resolve the query. 

Thanks in advance

Harsh Bhatia

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