2013 (2) TMI 805 - AT - Service Tax

Summary

Issues involved: Service Tax liability on maintenance and repair services of computer software u/s 73 of the Finance Act, 1994, applicability of Circulars issued by the C.B.E. & C., retrospective effect of statutory provisions.

Summary:

Issue 1: Service Tax liability on maintenance and repair services of computer software
The appellant, engaged in providing taxable services, received a show cause notice demanding Service Tax for a specific period u/s 73 of the Finance Act, 1994. The impugned order confirmed the demand along with interest and penalties u/s 76 and 78 of the Act. The appellant contended that they discharged the Service Tax liability from a certain date based on Circulars issued by the C.B.E. & C. The appellant argued that the statutory provision regarding maintenance or repairs, which included computer software, was amended w.e.f. 1-6-2007, making Service Tax liability effective only from that date. The appellant sought a stay on recovery of dues during the appeal.

Issue 2: Applicability of Circulars issued by the C.B.E. & C.
The appellant relied on Circulars issued by the C.B.E. & C. to support their contention that they were exempted from Service Tax for a certain period. The Circulars clarified the leviability of Service Tax on repair of computer software and the classification of software as goods. The appellant argued that they acted in good faith based on these Circulars and should not be held liable for Service Tax for the preceding period.

Issue 3: Retrospective effect of statutory provisions
The Tribunal considered the retrospective effect of the statutory provision that included computer software under the category of goods for Service Tax liability on maintenance or repair services. It was noted that explanations are prospective if they impose a burden on the assessee and retrospective if beneficial. The Tribunal found in favor of the appellant, granting unconditional waiver from pre-deposit of the dues and staying the recovery during the appeal period.

*(Dictated and pronounced in Court)*