Custom, Excise & Service Tax Tribunal
Ebz Online Pvt Ltd vs Commissioner Of Central Excise, Pune on 21 December, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.ST/333/09 (Arising out of Order-in-Appeal No.P-III/VM/192/09 dated 08/09/2009 dated passed by Commissioner of Central Excise (Appeals), Pune) For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== EBZ Online Pvt Ltd., Appellant Vs. Commissioner of Central Excise, Pune Respondent Appearance: Shri.Prasad Paranjape, Advocate for appellant Shri.N.A.Sayyad, JDR for respondent CORAM: Honble Mr. P.G. Chacko, Member (Judicial) Date of Hearing: 21\12\2010 Date of Decision: 21/12/2010 ORDER NO 1. After examining the records and hearing both sides, I note that the short question arising for consideration in this case is whether the service rendered by the appellant to their clients (banks) during the period of dispute (09/07/2004 to 30/04/2006) is taxable under the head management maintenance or repair service in terms of Section 65 (105) (zzg) of the Finance Act, 1994. The lower authorities have demanded service tax of Rs.5,66,333/- from the appellant under this head and have also imposed penalties on them. The service in question was rendered to various banks under specific agreements. It was rendered to each client in relation to application software already licensed to the clients (banks), for a period beyond the warranty period for the software licensed by the appellant. One of the relevant contracts is available on record as specimen and the same is Annual Maintenance Contract dated 11/11/2005 between the appellant and the Ramrajya Sahakari Bank Ltd. This document indicates that the appellant is liable to provide maintenance service on application software system during the tenure of the agreement. The learned Counsel for the appellant has also referred to certain other provisions of this contract and has submitted that the AMC covered nothing but information technology service to be rendered by the appellant to their clients (banks) in respect of the application software already licensed and installed in the system owned by the bank. It is submitted that the appellant was not liable to pay service tax on any information technology service during the period of dispute inasmuch as this service came to be taxable with effect from 16/05/2008 only. The Counsel has relied on the Tribunals recent decision in appeal No.ST/394/09 (SAP India Pvt Ltd., Vs. CCE, Bangalore-III) reported in 2010-TIOL-1569-CESTAT-Bang. Apart from the merits of the case, a plea of limitation has also been raised against the impugned demand of service tax. Case law has been relied on in this connection also. The learned JDR reiterates the findings of the original authority and the first appellate authority and also refers to the Supreme Courts judgement in Tata Consultancy Services Vs.State of Andhra Pradesh 2004 178 ELT 22 SC. It is submitted that computer software is goods as held by the apex Court and, therefore, the management, maintenance or repair service is very much applicable to such software also
2. After considering the submissions, I find that it is not in dispute that the activity undertaken by the appellant for the benefit of their clients (banks) during the period of dispute was only maintenance of application software already licensed and installed in the computer systems of the banks. In the case of SAP India Pvt Ltd. (supra) a Division bench of this Tribunal classified similar activity as information technology service under Section 65 (53 (a) of the Finance Act, 1994 and held that the same was exigible to service tax under Section 65 (105) (zzzze) of the Act with effect 16/05/2008. Such service was not taxable prior to the said date. The benefit of the decision in SAP case is squarely admissible to the present appellant on the facts of this case. What was considered by the Honble Supreme Court in Tata Consultancy Service (supra) was computer software, which is essentially different from application software. The software which is inbuilt in a computer, which is otherwise called operating software, is known as computer software in common parlance. The decision in Tata Consultancy Service (supra) is applicable to such software. Such software, no doubt, involves intellectual property. Application software also involves this property. However, the legislature in its wisdom has chosen to differentiate application software from operating software (computer software) for the purpose of levy of service tax and, accordingly, the maintenance of application software has been specifically designated as information technology software. It is necessary to give effect to the legislative policy. This is precisely what was done in SAP case and the same has to be got to be done in the instant case also. The appellant has already established a case on merits in their favour and therefore, it is not necessary for me to examine other issues including limitation.
3. The impugned order is set aside and the appeal is allowed.
(Pronounced in Court) (P.G. Chacko) Member (Judicial) pj 1 2