2014 (1) TMI 1422 - AT - Service Tax

Waiver of pre deposit - Contract for software development - Revenue considered it under manpower supply - Tribunal dismissed assessee s appeal - Held that - two different type orders (in the cases of Prime Focus and Cognizant Technology 2010 (3) TMI 328 - CESTAT, CHENNAI ) were passed by the Tribunal on the same day without application of mind. As on date on almost the very same facts, the issue stands decided against the applicant by the Tribunal - applicant has placed some additional documents which may be relevant for the purpose of determining the issue. We also notice that the chart now presented claiming deductions from demand confirmed has not been presented before the adjudicating authority and we are not in a position to accept the chart at this stage - Conditional stay granted.

Issues:
Interpretation of contract scope - Software development vs. Manpower supply
Validity of service tax demand for specific period
Consideration of previous Tribunal orders
Claim for reduction in total demand amount
Admissibility of appeal without pre-deposit

Interpretation of contract scope - Software development vs. Manpower supply:
The judgment revolves around the interpretation of contracts entered into by the applicant with Infosys and TCS. The Revenue contends that the contracts were for manpower supply, while the applicant claims they were for software development. The Counsel for the applicant argues that the agreements and task orders clearly show the job was related to software development. Reference is made to a previous Tribunal order dismissing an appeal based on similar contracts due to insufficient task order details. However, another order on the same date favored software development in a different case. The Counsel highlights this contradiction and challenges the correctness of the previous order against the applicant. The Revenue maintains that the applicant was supplying manpower for software development under the supervision of Infosys or TCS, as evidenced by the nature of work orders and invoices. The Tribunal finds merit in the Revenue's argument, citing that the issue has already been decided against the applicant based on similar facts.

Validity of service tax demand for specific period:
The Revenue issued a show cause notice demanding service tax for the period October 2007 to March 2008, categorizing the services under manpower supply. The Commissioner confirmed an amount against the applicant, including interest and penalties. The applicant contests this demand, asserting that the services rendered were not manpower supply but software development. The Tribunal directs the applicant to deposit a specified amount within a given timeframe, indicating that the balance dues are waived for appeal admission, with collection stayed during the appeal's pendency.

Consideration of previous Tribunal orders:
The judgment discusses the significance of previous Tribunal orders related to similar contracts and issues. The Counsel for the applicant argues that a previous order against them lacked consideration of task orders and was challenged before the Supreme Court. The Revenue emphasizes that the Tribunal had scrutinized the terms of the agreement and work orders in the previous case, concluding that the applicant was supplying manpower for software development. The Tribunal notes the existence of contradictory orders on the same date but ultimately upholds the decision against the applicant based on the facts presented.

Claim for reduction in total demand amount:
The applicant seeks a reduction in the total demand amount, highlighting that a portion relates to services rendered to units in SEZ and that a cum-tax benefit should be applied. The Revenue opposes this claim, disputing the amount related to services supplied to SEZ units and arguing against the consideration of certain worksheets that were not scrutinized by the Commissioner. The Tribunal does not fully accept the applicant's claim for reduction but directs a specific deposit amount and waives the balance for appeal admission.

Admissibility of appeal without pre-deposit:
The applicant requests the appeal's admission without any pre-deposit, citing errors in the previous Tribunal order and the pending challenge before the Supreme Court. The Revenue insists on a 100% pre-deposit due to the previous decision against the applicant. The Tribunal finds merit in the Revenue's argument, directing a partial deposit and waiving the remaining balance for appeal admission and during the appeal's pendency.

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