2015 (4) TMI 702 - AT - Service Tax

Management Consultancy Services or Consulting Engineers Services - development of software and system analysis for internet based trading services - Held that - Court called for the records and checked the invoices under which the appellant/assessee had billed the service recipient i.e. Financial Technology India Pvt. Ltd, Netfinex.Com India Ltd. and Multi Commodity Exchange of India. The invoices clearly indicate that the said consultation services are provided towards software and system development charges. It is on record as noted by the first appellate authority that the service of Design and Development of Computer Software rendered by the appellant/assessee are covered under Information & Technology Services would fall under Section 65(105)(zzze) and came into tax net in 2008. In our considered view, if the services rendered by the appellant/assessee are in respect of computer software then the tax liability may arise on them only from 2008. In our view the appellant/assessee has made out a strong case in their favour. - services rendered by the appellant/assesssee during the period in question will fall under the Consulting Engineers Services with exemption from the payment of service tax liability - Decided against Revenue.

Summary

Issues: Appeal against demand of service tax liability, non-imposition of interest and penalty, classification of services rendered by the appellant/assessee.

Analysis:

1. Demand of Service Tax Liability: The appeals were directed against an Order-in-Appeal confirming the demand of service tax liability on the appellant/assessee for the period from 2001 to 2004. The appellant/assessee had received payments for services rendered to various entities but did not discharge the service tax liability. The contention was that the services provided were related to software and system development for internet-based trading services, not falling under "Management Consultancy Services." Both lower authorities disagreed with this argument.

2. Classification of Services: The invoices indicated that the services provided were for software and system development charges, falling under Information & Technology Services. The adjudicating authority and the first appellate authority did not agree with the appellant/assessee's claim for exemption. However, upon review, it was found that the services rendered were in respect of computer software, which only came under the tax net in 2008. Therefore, the appellant/assessee was not liable for service tax during the period in question.

3. Judgment: The Tribunal held that the services rendered by the appellant/assessee during the relevant period fell under Consulting Engineers Services, exempting them from the payment of service tax liability. The appeal filed by the appellant/assessee was allowed with consequential relief, while the appeal filed by the Revenue was rejected. The Tribunal found in favor of the appellant/assessee based on the nature of services provided. The cross objection filed by the appellant/assessee was also disposed of in light of the main decision.

4. Conclusion: The judgment clarified the classification of services provided by the appellant/assessee, determining that they were not liable for service tax during the period in question. The decision provided relief to the appellant/assessee and rejected the Revenue's appeal, emphasizing the importance of correctly identifying the nature of services for tax liability purposes.

This detailed analysis of the judgment highlights the key issues involved and the Tribunal's decision on each matter, providing a comprehensive understanding of the legal implications and outcomes of the case.