2010 (7) TMI 389 - AT - Service Tax

Waiver of pre-deposit Scientific or Technical Consultancy Service - applicants are developing the software and their keeping upgradation of the same which is well covered under the Information Technology Service for which the applicants are paying Service tax w.e.f. 16-5-2008 when the impugned service came into the net of Service tax - demand pertains to the period prior to that - demand is not sustainable

Summary

Issues: Classification of services under 'Scientific or Technical Consultancy Service' and waiver of pre-deposit during appeal.

In this case before the Appellate Tribunal CESTAT, New Delhi, the applicants, registered under 'Business Auxiliary Service' and 'Maintenance & Repair Service,' started paying Service tax under 'Information Technology Software Service' from 16-5-2008. A show cause notice was issued proposing a demand of Service tax under 'Scientific or Technical Consultancy Service' after scrutiny of records.

The learned Advocate for the applicants argued that the activity undertaken does not fall under 'Scientific or Technical Consultancy Service' as they are involved in developing and upgrading software, which is covered under 'Information Technology Service' for which they have been paying tax since 16-5-2008. The demand in question relates to a period before this change, making it unsustainable.

The Tribunal noted that the applicants began paying tax on their activities from 16-5-2008 and that the issue revolved around the classification of services under 'Scientific or Technical Consultancy Service.' Considering the submissions, the Tribunal found that the applicants presented a strong case in their favor. As a result, the Tribunal waived the requirement of pre-deposit and stayed the recovery of the demanded amount during the appeal process.