2015 (1) TMI 276 - AT - Service Tax

Waiver of pre deposit - Information Technology Software services - Held that - Appellant has discharged the Central Excise duty on such software manufactured/prepared by them on payment of appropriate Central Excise duty. Under Chapter 8523 80 20, Information Technology Software is indicated as a commodity falling under Central Excise Tariff and by the deemed fiction of the Chapter Note and the Supplementary Note, the product becomes manufactured item. If that be so, discharge of Central Excise duty by the appellant itself would indicate that the appellant has correctly followed the law. Department s contention that the appellant is liable to pay Service Tax, prima facie, seems to be misconception of the said definition. We find that the appellant has made out a case for waiver of pre-deposit of the amounts involved. Accordingly, the application for waiver of pre-deposit of the amounts involved is allowed and recovery thereof is stayed till the disposal of appeal. - Stay granted.

Summary

Issues: Stay petition for waiver of pre-deposit of Service Tax, interest, and penalties under Sections 77 & 78 of Finance Act, 1994.

The judgment pertains to a Stay Petition seeking waiver of pre-deposit of Service Tax, interest, and penalties under Sections 77 & 78 of the Finance Act, 1994. The appellant had discharged Central Excise duty on customized software manufactured by them under Chapter Heading 8523. The Department contended that the software generated by the appellant's premises is liable to Service Tax under the category of Information Technology Software service. The Tribunal analyzed Chapter Note No. 10 of Chapter 85 and supplementary notes, concluding that the appellant correctly followed the law by discharging Central Excise duty on the software. The Tribunal found the Department's contention regarding Service Tax liability to be a misconception. Consequently, the Tribunal allowed the application for waiver of pre-deposit, staying the recovery till the appeal's disposal.

In the detailed analysis, the Tribunal noted that the appellant had discharged the Central Excise duty on the software manufactured by them, indicating compliance with the law. The Tribunal highlighted that under Chapter 8523 80 20, "Information Technology Software" is classified as a commodity falling under the Central Excise Tariff. By applying the Chapter Note and Supplementary Note, the software becomes a manufactured item, justifying the Central Excise duty payment by the appellant. The Tribunal found the Department's assertion that the appellant is liable to pay Service Tax to be a prima facie misconception of the definition. Consequently, the Tribunal concluded that the appellant demonstrated a case for the waiver of pre-deposit of the amounts in question.

The judgment showcases a comprehensive analysis of the legal provisions and factual circumstances surrounding the appellant's liability for Service Tax on customized software. By delving into the relevant Chapter Notes and Supplementary Notes, the Tribunal elucidated the correct classification of the software under the Central Excise Tariff. The Tribunal's decision to grant the waiver of pre-deposit was grounded in the appellant's adherence to Central Excise duty requirements and the Department's misinterpretation of the software's tax liability. The judgment exemplifies a meticulous examination of statutory provisions and factual evidence to arrive at a just and reasoned decision in favor of the appellant.