Customs, Excise and Gold Tribunal - Bangalore
Sap India Systems, Applications And ... vs The Commissioner Of Service Tax on 14 August, 2006
Equivalent citations: 2007(114)ECC83, 2007ECR83(TRI.-BANGALORE), 2007[5]S.T.R.439, [2007]7STT163
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIO No. 4/2006 dated 23.01.2006 passed by the Commissioner of Service Tax, Bangalore.
2. The Commissioner passed the impugned order consequent to CESTAT's Final Order No. F.O. 1579/2005 dated 02.09.2005. The issue before the Commissioner was whether the appellant M/s. SAP rendered services as "Management Consultant" for the period from 16.10.1998 to 31.03.2000 under the provisions of Section 73 of the Finance Act, 1944. The Commissioner has given very detailed findings to hold that the appellant rendered indeed services as 'Management Consultant' during the relevant period. Service Tax amounting to Rs. 13,37,39,102/- has been confirmed. Interest under Section 75 has been demanded. Penalty of Rs. 13 lakhs under Section 78 has been imposed. Further penalties have been imposed under Section 76 and 77 of the Finance Act, 1994.
3. Shri Prakash Shah, the learned Advocate, appeared for the appellants and Shri R.K. Singla, the learned JCDR, for the Revenue.
4. The learned Advocate brought to our notice that the purported power of Review under Section 84 exercised by the Commissioner is entirely without jurisdiction and without authority of law as the Review proceedings are clearly contrary to the orders of the Tribunal holding that the appellant rendered the services as Consulting Engineer. It was urged that the order of the Assistant Commissioner of Central Excise purported to be reviewed by the impugned order of the Commissioner of Service Tax was no longer in existence on the date of passing of the impugned order. In other words, the order of the Assistant Commissioner of Central Excise merged with the order of the Tribunal. Hence, the impugned order has effectively reviewed the order of the Tribunal and not of the Assistant Commissioner of Central Excise. The Commissioner of Central Excise has no power to review the order of the Tribunal under Section 84 of the Act and, therefore, the impugned order is illegal, bad in law and without jurisdiction and, therefore, liable to be set aside. The following case-law was relied on;
Bilrla Yamaha Ltd. v. CCE, Ghaziabad 2001 (135) ELT 82 (Tri.-del.) Elaborate reasons were given to hold that the sale of software is sale of goods and not rendering of any service.
5. The learned JCDR submitted that the impugned order has been passed pursuant to CESTAT's Final Order No. 1579/2005 dated 02.09.2005 and, therefore, the question of order under Section 84 of the Finance Act, 1994 does not arise. In the above mentioned order, the Tribunal did not confirm the categorization of service under Consulting Engineer, as wrongly mentioned by the appellant. Further, in the impugned order, there is a clear finding that the sale of software necessarily involves Advice, Consultancy and Technical Assistance by the appellant relating to conceptualizing, devising, development, modification, rectification and upgradation of the working system of client's organization. The aforesaid activities would fall under the category of Management Consultancy leviable to Service Tax w.e.f 16.10.1998. The Commissioner's order is very clear on the issue. It is a fact that the R/3 software developed by the appellant is a Management Consultant software. The appellant had not adduced any evidence to the effect that the customer has engaged any consultant other than the appellant's personnel. In para 5 of the impugned order, it is clearly stated that the legal position regarding classifications of services was changed w.e.f. 16.10.1998. Since the present case covered the period from 16.10.1998 to 31.03.2000 and the taxable service of Management Consultancy was introduced w.e.f. 16.10.1998, going by the classification of taxable services prescribed under Section 65A of the Act, services rendered by M/s. SAP are to be categorized under 'Management Consultant' only.
6. We have gone through the records of the case carefully. CESTAT, Chennai in the appellant's own case, passed the Final Order (No. 1416/2005 dated 06.10.2005) in Appeal S/73/2005/MAS arising out of OIA No. 284/2003-CE dated 26.09.2003 passed by the Commissioner of Central Excise (Appeals), Bangalore. Paras 2 and 3 of the said Final Order are extracted herein below:
2. The present appeal is against demand of service tax on the service of Consulting Engineer, from the appellants, for the period 7.7.1997 to 27.02.1999.
3. After examining the records and hearing both sides, we find that the short question arising for consideration is whether the service rendered by Software Engineer could be considered to be service rendered by a Consulting Engineer. In the impugned order, the ld. Commissioner (Appeals) has lucidly dealt with the issue as under:
However, it is evident that apart from licensing/sale of software, the appellant has to undertake quite a lot of activities, which are advisory in nature. These activities though inextricably connected with sale/licensing of software, are in the nature of services. These services involve consultation and advice. In developing and licensing for software business applications, the appellants have to employ a large number of qualified engineers apart from other professionals. In order to install their software in a particular industry/company, they have to provide a lot of advise related to software engineering. It should be borne in mind that the scope of consulting engineers is not limited only to the traditional branches of engineering such as mechanical, electrical and civil. Engineering techniques are applied even in management. In this sense, software engineers would also come within the ambit of Consulting Engineers as per the Finance Act, 1994. Apart from this, from the very fact that the Government of India chose to issue an exemption Notification on 28.2.1999 services rendered by Consulting Engineers in relation to Software clearly indicates that the Government of India has recognized the Software Engineers also as Consulting Engineers.
We have no reason to disagree with the above view, which is well-considered. Accordingly, the impugned order is affirmed and this appeal is dismissed.
From the above order, it is seen that in respect of the appellant, the Tribunal has held that the services rendered by them amount to Consulting Engineer services. In these circumstances, as rightly contended by the appellant, the order of the Assistant Commissioner purported to be reviewed by the Commissioner of Services Tax merges with the above mentioned order of the Tribunal. Therefore, we have no other option but to allow the appeal with consequential relief and set aside the impugned OIO.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)