Custom, Excise & Service Tax Tribunal
Ibm India Pvt Ltd vs Commissioner Of Central Excise, ... on 22 July, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/936/2009-DB [Arising out of Order-in-Original No. 88-2009 dated 25/08/2009 passed by CCE&ST, LTU, Bangalore] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes IBM INDIA PVT LTD, No.12, Bannerghatta Road, Bangalore 560029. Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-LTU NULL 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE, - 560085 KARNATAKA Respondent(s)
Appearance:
Shri M. Jai Singh, CA For the Appellant Shri N. Jagdish, Superintendent(AR) For the Respondent Date of Hearing: 22/07/2015 Date of Decision: 22/07/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER Final Order No. 21671 / 2015 Per : ARCHANA WADHWA The appellant is, inter alia, engaged in providing services relatable to maintenance and repair of computer software. It is seen that vide Notification No.20/2003-ST dt. 21/08/2003, the maintenance services relatable to computers, computer systems or computer peripherals were exempt from payment of service tax. In terms of the Boards Circular No.70/19/2003-ST dt. 17/12/2003, a clarification was also issued laying down that maintenance or repair of computer software would not be liable to service tax inasmuch as the same does not amount to maintenance or repair of tangible goods. As computer software is not tangible goods, the same would not be covered by the category of service of maintenance or repair of goods.
2. It is seen that the said Notification No.20/2003-ST dt. 21/08/2003 was subsequently withdrawn by Notification No.7/2004-ST dt. 09/07/2004. With the withdrawal of the said notification, Revenue entertained a view that the appellant is not covered by any exemption notification and as such, is liable to pay service under the category of maintenance and repair. They also relied upon the Boards Circular No.81/2/2005-ST dt. 07/10/2005 holding that in terms of the Honble Supreme Courts decision in the case of Tata Consultancy Services [2004(178) ELT 22 (SC)], the software is also required to be considered as goods and as such maintenance and repair of the software would amount to maintenance and repair of the goods and the assessees providing such services would be liable to service tax. With the issuance of the said circular, the appellants started paying service tax on the said activity of maintenance and repair of computer software.
3. In view of the above, proceedings were initiated against the appellant by way of issuance of a show-cause notice dt. 22/09/2009 proposing confirmation of demand of service tax to the tune of Rs.3,41,63,132/- for the period 09/07/2004 to 06/10/2005. The proposal in the said show-cause notice stands culminated into an order passed by the Commissioner confirming the service tax along with interest and imposing penalty to the extent of 100% in terms of Section 78 of the Finance Act, 1994.
4. Learned advocate appearing for the appellant has drawn our attention to the various decisions of the Tribunal as also to the Honble Madras High Courts decision, wherein it stands held that the service tax liability in respect of services relatable to maintenance and repair of computer software would be effective from 01/06/2007, when the definition of maintenance and repair service was expanded by including an explanation laying down that goods includes computer software. The Honble High Court of Madras in the case of Kasturi & Sons Ltd. [2011-TIOL-240-HC-MAD-ST], has struck down the Boards Circular No.81/2005-ST, as not applicable and has held that it is only with the expansion of definition of maintenance and repair service w.e.f. 01/06/2007, including the computer software as goods, that the said service would become liable to service tax. While holding so, the Honble Madras High Court has taken note of the Honble Supreme Courts decision in the case of Tata Consultancy Services(supra), which was the basis for issuance of Circular No.81/2/2005.
We also refer to the Tribunals decision in the case of SAP India Pvt. Ltd. Vs. CCE, Bangalore-III [2011(21) STR 303 (Tri. Bang.)] holding that software maintenance is liable for service tax only w.e.f. 16/05/2008 when the information technology software services were brought into service tax net. To the same effect is the another decision of the Tribunal in the case of EBZ Online Pvt. Ltd. Vs. CCE, Pune [2011(22) STR 185 (Tri. Mumbai)].
5. Though the issue stands decided by the Honble High Court of Madras in the above decision, we also find that the demand is barred by limitation having been raised beyond the normal period of limitation. For the said purpose, reference can be made to a latest decision of the Tribunal in the case of Ruchi Infotech Ltd. Vs. CCE, Indore [2015(37) STR 131 (Tri. Del.)]. Taking note of the entire developments on the subject and including that there was doubt in the field and as such, no allegation of any suppression or mis-statement can be made to the assessee. Accordingly, we hold that the demand is also barred by limitation.
6. In view of the above, the impugned order is set aside and the appeal is allowed on merits also on limitation, with consequential relief, if any, to the appellant.
(Order pronounced and dictated in open court) ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER raja 5