2014 (3) TMI 1125 - AT - Service Tax

Demand of Service Tax - Management, Maintenance and Repair Service - Information Technology Software Service - demand of Interest on belated payments - Held that - None of the submissions have been considered in detail by the original adjudicating authority. The figures submitted have not been accepted on the ground that the appellants did not furnish chartered accountant s certificate which they had promised to furnish - the chartered accountant s certificate is dated 01.12.2012 whereas order-in-original is dated 03.11.2012. Obviously the chartered accountant s certificate was not available to the Commissioner and he was handicapped. The submission that maintenance of software was not liable to service tax till 16.05.2008 has also not been dealt with. Similarly the submission that services rendered to SEZ are not liable to service tax has not been taken into account on the ground that the chartered accountant s certificate was not sufficiently detailed or did not give necessary details. The matter is remanded to the original adjudicating authority for fresh consideration of all the issues - the Commissioner is directed to deal with all the submissions that are made - appeal allowed by way of remand.

Summary

Issues:
Service tax demand for 'Management, Maintenance and Repair Service' in respect of software, service tax demand for Information Technology Software Service, interest demanded for delayed payment.

Analysis:
1. The appellant was demanded service tax for 'Management, Maintenance and Repair Service' (MMR) and Information Technology Software Service. The appellant argued that the nature of the transaction was the purchase and sale of IT, which did not involve any service element. They referred to previous court decisions and pointed out that maintenance of software was not liable to service tax before a certain date. The original adjudicating authority did not consider these submissions in detail, and the figures submitted were not accepted due to the absence of a chartered accountant's certificate. The Tribunal found that the Commissioner could have allowed more time for the submission of the certificate and remanded the matter for fresh consideration.

2. The appellant also raised concerns about mistakes in the calculation of taxable value and the incorrect application of service tax rates. They argued that several submissions were not adequately addressed. The Tribunal agreed that there were glaring mistakes in the order and that the matter needed to be remanded for proper verification and consideration of all submissions.

3. The appellant contended that they were engaged in the resale of software, acting as intermediaries between customers and foreign principals. They argued that their activities did not fall under Business Auxiliary Service or Information Technology Software Service. The Tribunal found that the department had not fulfilled its obligation to prove that the appellant's activities constituted taxable services. The issue of whether the appellant's activities amounted to taxable services required further detailed consideration.

4. The Tribunal noted that certain submissions regarding the non-liability of service tax for maintenance of software and services rendered to Special Economic Zones (SEZ) were not adequately addressed. The matter was remanded to the original adjudicating authority with directions to consider all submissions and provide the appellant with a reasonable opportunity to present their case. The Commissioner was instructed to adjudicate the matter promptly after receiving detailed submissions from the appellant.