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2. Briefly stated the facts of the case are that the appellant is engaged in providing Information Technology Service (ITSS), Business Auxiliary Service (BAS), Management or Maintenance or Repair Service (MMR Service), online information database retrieval etc. During the course of audit of their records by the Department and scrutiny of the invoices/bills raised in connection with "Annual Technical Support Service" (ATS for short) rendered by them during the period from February 2007 to March ST/1192/2011 2009, it was observed that the appellant had discharged the service tax only 25% of the bill value instead of 100%. On scrutiny of the invoices for the period prior to 2007, it was noticed that the appellant was discharging service tax on 100% of the taxable value. On further analysis of the agreement with various clients, it was observed that the software belonging to the appellant is being sold to a customer, technical support is provided for one year without any charge. From second year onwards, the customer has to pay a pre-determined amount for utilising the technical support purchased from the assessee. On analysis of the agreement relating to provision for ATS, the Department alleged that the service falls under the category of MMR service as defined under Section 65(64) of the Finance Act, 1994. Further, it is noticed that the appellant, w.e.f. 16/05/2008, is paying service tax on the right to use software under ITSS; hence, they claimed that for the earlier period, there was a transfer of right to use of the property to the customers. It is alleged that the said explanation of the appellant is incorrect, as per the agreement, the title / copyright and other software upgrades and maintenance releases i.e. improved versions and release of the licensed software, software trouble reports, enhancements etc., vest with the appellant at all points of time and it is not transferred to the clients. It is also alleged that the abatement of 75% availed by the appellant from the gross amount charged in rendering ATS is irregular and the service tax short paid amounting to Rs.11,57,60,089/- for the period from February 2007 to March 2009 invoking extended period was demanded by issuing a show-cause notice on 02/03/2010. On adjudication, the demand was confirmed with interest and penalty under Section 76, 77 and 78 of the Finance Act, 1994. Hence, the present appeal.

• Finacle application would be received on a media (DVD). • The license for the customer would be sent separately and not with the media.
• Further the customer checks for the required pre-requisite software (like, Java, Oracle, WAS etc.) to be in place. • The scenario in which the installation will happen is identified. For example, this may include identifying the servers where different tiers will lie.
• Installation of database instance with Finacle schemas and table spaces.

4. The learned Authorised representative (AR) on behalf of the Revenue submitted that during the course of audit in August 2009, the invoices/bills raised by the appellant in relation to ''Annual Technical Support" services for the period February 2007 to March 2009 were scrutinized and then it was noticed that the appellant had discharged the service tax only on 25% of the invoice value instead of on 100% of the invoice value. "Annual Technical Support" was provided to various banks by the appellant with ST/1192/2011 whom they had an agreement in relation to maintenance of their customized software 'Finacle' used by the banks. These services were provided over and above the implementation, installation and training services provided by the appellant to the clients with respect to their customized software Finacle for a separate consideration termed as 'Annual Technical Support' charges. A perusal of the agreements revealed that the Annual Technical Support consisted of following services.

6.1. Reliance placed on by the appellant in their own case Infosys Technologies Ltd. Vs. Commissioner of Commercial Taxes, Chennai (supra), the issue was whether the software customized or non-customized satisfies the rules as goods and whether it will be goods for the purposes of sales tax. The reliance placed on the decision in their own case decided by the Hon'ble High Court of Karnataka in the case of Infosys Ltd. Vs. Commissioner of Commercial Tax is also misplaced. The judgment refers to 3 types of transaction in terms of the Circular No. 17/06-07 dated 24.07.2006 issued by the VAT Authorities of Karnataka and these transaction are direct sale of software through an appropriate media; the second one is deemed sale or transfer of property in the execution of works contract where the seller would liable to claim deduction from his taxable turnover amount to his labour charges; the third category does not involve any transfer of property in software either as sale or as a part of deemed sale. At para 26 of the above order, it is observed as follows: