2013 (4) TMI 213 - AT - Service Tax

Management, Maintenance or Repair Service - Software Services Agreement - period in question from February 2007 to March 2009 - appellant seeks waiver and stay in respect of the adjudged dues - assessee s claim for the benefit of Notification No. 12/03-ST - Held that - The terms and conditions of the Software Services Agreement (between the appellant and ICICI Bank Corporation Ltd.) produced by the appellant indicate that the service rendered by the appellant comprises adaptation, upgradation, enhancement, implementation etc of IT software. These processes are expressly covered by the definition of IT Software Service under Section 65(105)(zzzze) of the Finance Act 1994. This service became taxable with effect from 16/5/2008 only. Admittedly, the appellant has paid service tax under the Head IT Software Service from 16/5/2008. In the case of SAP India Ltd. (2010 (9) TMI 289 - CESTAT, BANGALORE) the question whether the same activity could be alternatively classified as maintenance or repair of software was examined by a coordinate Bench and the same was answered in the negative. Also in EBZ Online Pvt. Ltd. (2010 (12) TMI 101 - CESTAT, MUMBAI) was decided in favour of assessee, following the decision in SAP India case. Thus the appellant seems to have reasons to claim support from the said decisions of this Tribunal. Also the reasons stated by the adjudicating authority for rejecting the claim for abatement under Notification No.12/03-ST are questionable. In this scenario, predeposit and stay of recovery in respect of the adjudged dues waived.

Summary

Issues:
- Appellant seeks waiver and stay of adjudged dues under "Management, Maintenance or Repair Service"
- Discrepancy in service tax payment on invoice/bill value
- Appellant's argument based on Software and Services agreement
- Claim for abatement under Notification No. 12/03-ST
- Validity of invoking extended period of limitation
- Benefit of Notification No. 12/03-ST in case of deemed sale

Analysis:
1. The appellant filed an application seeking waiver and stay regarding the adjudged dues under the Head "Management, Maintenance or Repair Service." The demand was based on findings of an audit team regarding the service tax payment discrepancy on invoice/bill value. The department claimed the appellant was liable to pay service tax on 100% of the value, resulting in a demand notice. The impugned order was passed by the Commissioner in response to a show-cause notice invoking the extended period of limitation due to alleged suppression of taxable value by the appellant.

2. The appellant's counsel argued that the services provided fell under "Information Technology Software Service" based on a specimen agreement with a customer. They contended that service tax was only payable from 16/5/2008 under this head, not under "Management, Maintenance or Repair Service." Citing tribunal decisions, the appellant claimed support for their classification and also sought abatement under Notification No. 12/03-ST. The counsel emphasized that the denial of this benefit was unjustified and challenged the grounds for invoking the extended period of limitation.

3. The Commissioner (A.R.) supported the adjudicating authority's findings, stating that the benefit of Notification No. 12/03-ST could not apply due to the nature of the transaction as a deemed sale, not an actual sale of goods. He argued against granting the benefit in such cases involving deemed sales.

4. Upon careful consideration, the Tribunal found a prima facie case for the appellant. Reviewing the Software Services Agreement, it was observed that the services provided aligned with the definition of "IT Software Service" taxable from 16/5/2008. Previous tribunal decisions supported the appellant's argument, indicating a basis for their claim. The rejection of abatement under Notification No. 12/03-ST was deemed questionable, leading the Tribunal to grant waiver of predeposit and stay of recovery for the adjudged dues in favor of the appellant.