Document Fragment View

Matching Fragments

3. Parallely, the authorities under the service tax regime held a belief that the software imported was a service and that the petitioner was therefore, liable to pay service tax on such software. It is undisputed that the Commissioner of Central Excise, Customs and Service Tax, Surat passed an order dated 19.8.2014 holding that software provided by the exporters should be treated as Information Technology Software under section 65(53a) of the Finance Act, 1994 and correspondingly exigible to service tax under section 65(105) (zzzze) of the Finance Act, 1994. He accordingly ordered recovery of service tax of Rs.1.13 crores(rounded off) with interest and penalties.

9. The adjudicating authority under the provisions of the Service Tax i.e. The Commissioner of Central Excise, Customs & Service Tax, Surat by the order-in- original dated 19.08.2014 has confirmed the levy of service tax on the invoice of Software obtained by the petitioners on the ground that the same would be covered under the category of taxable service i.e. "Information Technology Software Services"

"17. On careful examination of services provided by M/s Sarin, M/s Galatea and M/s DiamSoft as discussed in the impugned Show Cause Notice, I find that the aforesaid Softwares are Tailor Made Software/ Customized Softwares, exclusively developed for Diamond manufacturing companies by the aforementioned foreign software companies and cannot be used in any other industry. Further, the said software is not mass-market NEUTRAL CITATION C/SCA/16691/2014 JUDGMENT DATED: 25/06/2025 undefined product generally available in packaged form off-the-shelf in retail outlets, as the same are being directly supplied via Email/ Internet by the said foreign companies from abroad to the buyer diamond manufacturing company. Further, I observe that M/s JB had placed the order for said taxable services directly to the said foreign companies and these companies had issued the invoices directly in the name of M/s JB and had supplied the software and/or License / Right to use / End use agreement to them only. I find that this fact, supra, has been discussed in a very logical way by providing with detailed illustrations of relevant bills, Invoices etc. in the impugned Show Cause Notice. I find that M/s JB, either in their defence reply or at the time of personal hearing, have not rebutted, on this score, with satisfactory logic and reasoning. Further, M/s JB had made the payment for the said services by remitting the amount in convertible foreign currency to these foreign companies. The said foreign companies are owner of the said Software and M/s JB had paid them the amount for License / Right to use/End User License and purchase of software for their commercial / business use and they cannot alter/amend the said NEUTRAL CITATION C/SCA/16691/2014 JUDGMENT DATED: 25/06/2025 undefined software. I hold that the Softwares provided by the said Companies are covered under "Information Technology Software"
(iv) of Service Tax Rules, 1994, Rule 2(1)(d)(i)(G) of Service Tax Rules, 2012; Rule 3 of the Place of Provision of Services Rules, 2012 and the provisions of Section 66A of the Finance Act, 1994, which are discussed at length in the impugned notice and not repeated here for the sake of NEUTRAL CITATION C/SCA/16691/2014 JUDGMENT DATED: 25/06/2025 undefined duplication, I hold that M/s JB, as a recipient of taxable service of "Information Technology Software Services" as defined under Section 65(105)(zzzze) of the Finance Act, 1994, is liable to pay Service Tax under reverse charge mechanism. M/s JB owns the manufacturing/ processing unit at Surat and has utilized the said Information Technology Software Services at their Surat premises and they, therefore, after initiation of inquiry by DGCEI, obtained Service Tax Registration at their Surat address as mentioned above and paid amount of Service Tax is, therefore, rightly required to be demanded from the registered premises shown in Service Tax Registration. M/s JB, as a recipient, had not paid Service Tax on the Information Technology Software Service, under reverse charge mechanism under Section 66A of Finance Act, 1994.