2014 (6) TMI 169 - AT - Service Tax

Business auxiliary services - Intellectual Property Right service - Procurement of master CD containing software opera - Held that - demand of Rs. 64,11,347/- is covered by the earlier decision of the Tribunal in the case of Paul Merchants Ltd. 2012 (12) TMI 424 CESTAT, Delhi (LB) and in the case of Gap International India Pvt. Ltd. 2014 (3) TMI 696 - CESTAT NEW DELHI - As regards, the balance demand of Rs.31,78,587/- , we note that appellant admittedly started paying the service tax liability on such activities with effect from 16.5.2008, under the category of Information technology software. As such, the Revenue came to know about the activities of appellant at least with effect from 16.5.2008, the demand having been raised in the year 2011 is by invoking the longer period of limitation. The reasoning of the authorities below that appellant did not take the service tax registration and did not file any return cannot be adopted as the condition for invokation of longer period inasmuch as the question of limitation would admittedly arise in the case where no service tax has been paid. If non-payment of service tax is taken as one of the criterion for invokation of longer period of limitation, then the normal period would not be applicable, in any case of demand of service tax. As such, we prima facie agree with the applicant that longer period is not available to the Revenue - Reference made to Tribunal s decision in the case of IBM India (P) Ltd. 2009 (7) TMI 487 - CESTAT, NEW DELHI wherein Tribunal s decision in the case of BCCI 2007 (5) TMI 24 - CESTAT, MUMBAI) and Glaxo Pharmaceuticals 2005 (7) TMI 25 - CESTAT, Mumbai is relied upon - Stay granted.

Summary

Issues:
1. Whether the demand of Rs.64,11,347/- for business auxiliary services is liable to be paid by the appellant.
2. Whether the demand of Rs.31,78,587/- for Intellectual Property Right services is justified.
3. Whether the longer period of limitation can be invoked by the Revenue due to non-payment of service tax.

Analysis:
1. The Tribunal considered the appellant's contention that the services provided, involving procuring orders for their overseas parent company from India, should be classified as export of services. The Tribunal referred to previous decisions supporting this view. The learned DR agreed with this argument, leading the Tribunal to prima facie believe that the demand of Rs.64,11,347/- is not payable by the appellant.

2. Regarding the balance demand of Rs.31,78,587/- for Intellectual Property Right services, the appellant argued that the services provided fell under Information Technology Software Services introduced from 16.5.08. The appellant claimed that they started paying service tax under this category from the mentioned date. The Revenue contended that the services were Intellectual Property Right services based on the terms of the agreement. However, the Tribunal noted that the appellant began paying service tax under a different category from 16.5.08, and the demand raised in 2011 was barred by limitation since the Revenue was aware of the activities since 2008. The Tribunal held that the longer period of limitation was not applicable in this case.

3. The Tribunal further emphasized that if the Revenue classifies certain activities under a newly introduced category, those activities cannot be considered taxable under a different category before the introduction of the new one. Referring to previous decisions, the Tribunal concluded that the appellant was entitled to an unconditional stay, considering the Revenue's acceptance of the service tax liability under Information Technology Software Services from 16.5.08 onwards. The Tribunal ordered accordingly, granting relief to the appellant.