2014 (12) TMI 786 - AT - Service Tax

Waiver of pre deposit - Information Technology Software Services - Held that - On going through the definition ITSS as provided in clause (zzzze) of Section 65(105) the software supplied electronically only appears to be liable and therefore in the case which is before us where software has been provided after loading on physical media is not covered. Therefore appellant has made out prima facie case for waiver on merits. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted - Stay granted.

Summary

Issues:
Interpretation of the definition of Information Technology Software Services (ITSS) under Section 65(105)(zzzze) for software sold in CD form.

Analysis:
The appellant, engaged in selling software, faced a demand for tax by the Revenue for selling software loaded into CDs to customers, treating it as provision of ITSS. The appellant contended that ITSS, as per the definition in Section 65(105)(zzzze), covers services related to information technology software supplied electronically only, not when software is provided in CD form. The appellant also cited a Supreme Court decision where it was held that sales tax is attracted when software is sold in CD form, supporting their argument. The Revenue argued that the Supreme Court decision was not relevant as it pertained to sales tax liability on software provided on physical media. The Revenue claimed the issue was debatable and required further consideration.

Upon reviewing the submissions, the Tribunal analyzed the definition of ITSS under Section 65(105)(zzzze). It was observed that the definition appears to make software supplied electronically only liable for tax. In the case at hand, where software was provided after loading on physical media (CDs), it was determined that it did not fall under the definition of ITSS. Consequently, the Tribunal found that the appellant had established a prima facie case for waiver on merits. As a result, the requirement of pre-deposit was waived, and a stay against recovery was granted. The appeal was scheduled for final hearing alongside another related appeal.

In conclusion, the Tribunal's judgment clarified the interpretation of ITSS under Section 65(105)(zzzze) regarding the sale of software in CD form. The decision highlighted that the definition of ITSS pertained to software supplied electronically only, excluding software provided on physical media like CDs. The Tribunal's ruling favored the appellant, granting a waiver on the basis of prima facie merit and staying the recovery of tax amount demanded by the Revenue.