Custom, Excise & Service Tax Tribunal
Cce, Jaipur-I vs M/S.Natural Technologies Pvt. Ltd on 30 December, 2016
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:26.12.2016
/Decision:30.12.2016
Service Tax Appeal No.112/2012-CU(DB)
[Arising out of Order-in-Appeal No.444 (DKV)ST/JPR-I/2011 dated 25.10.2011 passed by the Commissioner (Appeals-I), Customs & Central Excise,Jaipur]
CCE, Jaipur-I Appellants
Vs.
M/s.Natural Technologies Pvt. Ltd. Respondent
Appearance:
Rep. by Shri Ranjan Khanna, DR for the appellant. Rep. by none for the respondent. Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. B. Ravichandran, Member (Technical) Final Order No.56191/2016 Per B. Ravichandran:
Revenue is in appeal against the order dated 25.10.2011 of Commissioner (Appeals-I), Customs & Central Excise, Jaipur.
2. The respondent were engaged in providing maintenance or repair services of computer software. The dispute in the present appeal relates to non-payment of service tax on such services during the period 9.7.2004 to 6.10.2005. The Original Authority held that the respondent are liable to pay service tax of Rs.16, 71,968/- and also imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994. On appeal, vide the present impugned order, the Commissioner (Appeals) allowed the appeal on the ground of limitation. Aggrieved by this, the Revenue is in appeal.
3. We have heard ld. AR for the Revenue. None appeared on behalf of the respondent.
4. We have perused the appeal records.
5. The impugned order held the demand as unsustainable in view of limitation under Section 73 of the Finance Act, 1994. It was noted that service in relation to maintenance or repair of computers, computer systems or peripherals were exempted from payment of service tax vide notification no. 20/03-ST dated 21.08.2003. CBEC vide circular dated 17.12.2003 clarified that maintenance of software is not chargeable to service tax. Again, CBEC vide circular dated 7.10.2005 clarified that software, being goods, any service in respect of maintenance or repair or servicing of software is liable to service tax. This clarification was issued after the decision of the Honble Supreme Court in the case of Tata Consultancy Services (CA No.2582 of 1998).
6. Further, the impugned order also noted the sequence of events with reference to tax liability of maintenance of computer software including the Explanation inserted under Section 65(64) of the Act to the effect that goods includes computer software. It was also noted that Board vide Circular dated 28.3.2007, after insertion of the said explanation, again clarified the scope of maintenance or repair of computer software and development of computer software. We note that the impugned order noticing the development and case laws on this issue, by referring to various decisions of the Tribunal and the High Courts, held that tax liability on this service was not free from doubt and was subject matter of large number of litigations. Invoking fraud, suppression and intention to evade payment of duty is not legally sustainable in such situation. It was held that there was a bonafide doubt regarding tax liability and as such, the demand for extended period is not sustainable. We note that in the appeal, the Revenue relied on the various case laws to contend that the extended period of demand is sustainable in the present case. We find that the facts of the case and the chronological development relevant to the tax liability on maintenance or computer software have been elaborately recorded in the impugned order. It cannot be disputed that the Board itself earlier clarified that the maintenance or repair of computer software is not taxable. The stand was revised after the decision of the Honble Supreme Court in Tata Consultancy Services (supra).
7. In such a situation, it cannot be alleged that the tax liability was willfully evaded by the respondent. There is nothing in the present appeal by the Revenue to even remotely sustain such allegation. We find no merit in the present appeal and accordingly find no reasons to interfere with the impugned order. The appeal by Revenue is accordingly dismissed.
[Order pronounced on 30.12.2016] ( Justice Dr. Satish Chandra) President ( B. Ravichandran ) Member (Technical) Ckp.
1Appeal No.ST/112/2012