2015 (7) TMI 97 - AT - Service Tax

Services of maintenance of Computer Software - Held that - Without going into the aspect whether the said explanation expands the trajectory of the existing legislation and hence is inapplicable retrospectively, in the wake of the fact that even the Government acknowledged the existence of confusion/ambiguity with regard to the coverage of management, maintenance and repair of software under the Management, Maintenance or Repair Service to such a degree as to warrant addition of an explanation to clarify the issue and also in view of the aforesaid judicial precedents, it is amply clear that the extended period cannot be invoked making this component of the impugned demand clearly barred by time as it pertains to the period 9-7-2004 to 31-3-2006, while the show cause notice was issued on 15-4-2008. Services of Lease Line connectivity - Held that - As per Section 105(75) of Finance Act, 1994 Online Information and Database Access and Retrieval Services means providing data or information, retrievable or otherwise to a customer, in electronic form through a computer network . When no data or information was provided by the appellants nor does the show cause notice contain any allegation to that effect, the question of sustaining this component of impugned Service Tax demand under Online Information and Database Access and Retrieval Service simply does not arise. Therefore the demand of ₹ 6,90,674/- under this category is not sustainable on merit itself. Services of Calibration of Machine - Held that - The appellants have vehemently stressed that the calibration of machines is done by customers themselves on their own and they only sell their software to the customer, which is used by them for that purpose. The show cause notice also does not elaborate as to how it is covered under Management, Maintenance or Repair service. Seen in this light the demand of ₹ 28,800/- also does not sustain on merit. Services of cartridge refilling - Held that - The show cause notice does not elaborate as to how cartridge refilling would come under the category of Maintenance or Repair service. It is argued by the appellants that refilling of ink in cartridges of customers actually tantamount to sale and therefore cannot be liable to Service Tax. Services of The Technical Support Charges - Held that - In such a situation and having regard to the fact that the show cause notice or the impugned order does not elucidate as to on what basis this component of demand was covered under Scientific or Technical Consultancy Service and also the fact that this activity specifically became taxable with effect from 15-5-2008, the appellants contention that they genuinely did not consider themselves to be science or technology organisation is not without considerable force. Consequently the allegation of suppression of facts and invocation of extended period simply cannot be sustained. As a result, as the period involved for this component of impugned demand is 2002-03 to 2004-05 and the show cause notice was issued on 15-4-2008, this component of impugned demand is fatally hit by time-bar. Mere non-registration and non-filing of returns are totally insufficient to sustain the allegation of suppression of facts when the show cause notice nowhere even remotely brings out as to how the appellants bona fides were suspect or what factors indicated the existence of an intention on their part to evade Service Tax. - Decided in favour of assessee.

Summary

Issues:
1. Maintenance of computer software
2. Lease Line Connectivity
3. Calibration of Machine
4. Cartridge Refilling
5. Technical Support Charges

Maintenance of computer software:
The appellants contested the demand related to maintenance of computer software, arguing that they genuinely believed it did not fall under management, maintenance, or repair services. The Government later clarified that computer software fell under this category, acknowledging the confusion. Citing judicial precedents, the extended period for this demand was deemed time-barred as the show cause notice was issued after the period in question.

Lease Line Connectivity:
The appellants provided lease line connectivity without offering data access, disputing its classification under Online Information and Database Access and Retrieval Services. As the show cause notice did not establish how the service fell under the mentioned category, the demand of Rs. 6,90,674 was deemed unsustainable based on merit.

Calibration of Machine:
The demand for calibration of machines under management, maintenance, or repair services was challenged by the appellants, who clarified they sold software for calibration, not maintenance services. The lack of evidence in the show cause notice supporting this classification led to the demand of Rs. 28,800 being unsustainable.

Cartridge Refilling:
The demand for cartridge refilling under maintenance or repair services was disputed by the appellants, arguing that refilling ink was akin to a sale and not a taxable service. The impugned order itself acknowledged this nature of the activity, rendering the demand of Rs. 97,898 unsustainable.

Technical Support Charges:
The appellants' technical support charges were categorized under Scientific or Technical Consultancy Service, which they contested, claiming it was covered under a new service category introduced later. As the show cause notice failed to provide a basis for this classification and the activity became taxable after the period in question, the demand for this component was time-barred and unsustainable.

Conclusion:
The appellants' appeal was allowed, and the impugned order was set aside due to the lack of merit in the demands raised and the failure to establish suppression of facts for invoking the extended period. The judgment provided detailed analyses for each issue, emphasizing the legal interpretations, precedents, and statutory provisions relevant to the case.