2014 (1) TMI 1608 - AT - Service Tax

Demand of service tax - Business Auxiliary Service - Information Technology Service - Classification of service - Held that - activity of the Respondents is receiving information from M/s. TPSL, United Kingdom which was recorded and processed and the processed information in that form of data was transmitted back to United Kingdom digitally via the international data leased circuits, commissioned through international service providers - Computer Data Processing comes under Information Technology Service and is excluded from the scope of Business Auxiliary Service - Following decision of CS E-serve Ltd. vs. CST, Mumbai II 2013 (9) TMI 70 - CESTAT MUMBAI - Decided against Revenue.

Summary

Issues:
- Whether the activity undertaken by the Respondents falls under Information Technology Service?
- Whether the impugned order passed by the Commissioner (Adjudication) Central Excise, Mumbai is sustainable?

Analysis:

Issue 1: Whether the activity undertaken by the Respondents falls under Information Technology Service?

The Respondents argued that their activity of receiving information from M/s. TPSL, United Kingdom, processing it, and transmitting back the processed data digitally falls under Information Technology Service, thus excluding it from Business Auxiliary Service. The Tribunal, in a similar case involving Computer Data Processing Service, held that such activities are indeed Information Technology Services and are not covered under Business Auxiliary Service. The Tribunal referred to a Circular and explained that the services related to designing, developing, or maintaining computer software, computerized data processing, or system networking are classified as Information Technology Service. The Tribunal emphasized the significance of punctuation in statutory interpretation, citing examples where punctuation marks influenced the interpretation of legal provisions. Consequently, the Tribunal found that the Respondents' activity aligns with Information Technology Service and upheld the decision that it falls outside the purview of Business Auxiliary Service.

Issue 2: Whether the impugned order passed by the Commissioner (Adjudication) Central Excise, Mumbai is sustainable?

The Revenue challenged the impugned order, contending that the Respondents' activity does not qualify as Information Technology Service and, therefore, the order dropping proceedings against the Respondents is not sustainable. However, the Tribunal, based on the precedent set in a previous case and the interpretation of relevant legal provisions, concluded that the activity in question indeed falls under Information Technology Service. The Tribunal highlighted the incorrect reliance by the Revenue on a Board's clarification, emphasizing the misinterpretation of the punctuation in the explanation provided for Business Auxiliary Service. Relying on the earlier decision and the proper statutory interpretation, the Tribunal found no fault in the impugned order passed by the Commissioner (Adjudication) Central Excise, Mumbai, and dismissed the appeal filed by the Revenue.

In conclusion, the Tribunal upheld the decision that the activity undertaken by the Respondents falls under Information Technology Service, excluding it from Business Auxiliary Service, and deemed the impugned order sustainable based on the correct statutory interpretation and legal precedent.

This comprehensive analysis of the judgment provides a detailed understanding of the issues involved and the Tribunal's reasoning behind the decision.