Customs, Excise and Gold Tribunal - Bangalore
Sap India Systems Applications And ... vs The Commissioner Of C. Excise on 2 September, 2005
Equivalent citations: 2006(104)ECC444, 2006ECR444(TRI.-BANGALORE), 2006[1]S.T.R.198
ORDER S.L. Peeran, Member (J)
Page 445
1. This appeal arises from the Order-in-Revenue No. 1/2004 dated 26.4.2004 / 2.05.2004 passed by the Commissioner of Central Excise, Bangalore. The Order-in-Original No. 8/2002 dated 08.5.2002 passed by the Assistant Commissioner of Central Excise, Bangalore was a detailed order and he has after due examination accepted the assessee's plea that they are not Consulting Engineer in terms of Section 65(13) of the Finance Act, 1994. He dropped the proceedings raising demand in terms of addendum/corrigendum dated 2.11.2000 under the category of Management Consultant. The assessee has placed all the evidence on records including case laws to support their contention that mere sale of software cannot be equated to a service of Management Consultancy and chargeable to tax. They have shown evidence in support of their plea that they were not carrying out the activities of Management Consultant. Their plea is that they do not fall under the category of Management Consultant and further submit that the following essential ingredients need to be satisfied for their inclusion :
(i) The person should be engaged in the profession of providing service;
(ii) The service may be provided either directly or indirectly;
(iii) The services must be in connection with the management of any organization in any manner; and
(iv) A management consultant includes any person who renders any advice, consultancy or technical assistance relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization.
It is the contention of the appellants that mere sale of R/3 software to their customers would not make them as Management Consultant. It is their submission that mere sale of software is only sale of goods and that cannot bring them within the category of Management Consultant. The appellant has taken several pleas and evidence has also been produced. Further the Commissioner has raised these issues in Para 8 of the impugned Order but none of the said issues or evidence have not been discussed. He has merely proceeded to hold the appellant as Management Consultant without giving any reason. The learned Counsel submits that the admitted position is that the appellants were only selling R/3 software as per their Page 446 clients requirements and that admitted position is sufficient to hold that the appellant is not carrying on the services of Management Consultant. He submits that the order is not a speaking order and hence the same is to be set aside. He relies on the Apex Court judgment rendered in the case of TATA Consultancy Services v. State of Andhra Pradesh 2004-TIOL-87-SC-CT wherein it has been held that sale of software amounts to sale of goods.
3. The learned SDR submits that the Board has issued a Notification No. 15/2004-Service Tax dated 10th September 2004 granting exemption to Enterprise Resource Planning software system supplied by the Management Consultant in connection with the management of any organization in any manner from the whole of service tax. The period involved is earlier to the date of notification and hence they fall within the net of Service Tax.
4. The learned Counsel submits that this notification clearly justifies their plea inasmuch as that their dealing or functioning of Management Consultancy in connection with the management of any organization in any manner cannot be construed as Management Consultant. He submits that the Order-in-Original is a speaking order as the Assistant Commissioner had examined all the materials including the case laws to drop the proceedings. The Review Order is without any finding and is a non-speaking order. The Commissioner ought to have taken all the points to consider the appellant's plea and given a detailed findings.
5. We have considered the submissions. In the absence of any reasons and findings in the impugned order, it is difficult to give an order on merits. The appellants have made out very strong ground for considering their plea that they are not Management Consultant in the light of the submissions made. Their pleas require reconsideration by the lower appellate authority. Therefore we are of the considered opinion that the matter is required to go back for de novo consideration. The Commissioner shall decide the matter in the light of the submissions and grounds which have already been brought out by the appellants in the proceedings including their submissions that they were only selling software and it is only sale of goods in terms of the Apex Court judgments (supra). As the other issues have not been dealt with by the Commissioner, that should also be dealt with in the de novo proceedings. The Commissioner shall dispose of the matter within a period of four months from the date of receipt of this order. The appellants may also make use of this opportunity to contest the appeal.
(Pronounced and dictated in the open court)