2016 (3) TMI 1314 - AT - Service Tax

Demand of service tax - Computer Network services - Online Information services - technical consultancy charges recovered by them for software development - Held that - The said services became taxable w.e.f. 15-05-2008 and for the period being prior to the same, no demand can be sustained - the period in the present case is prior to 15-05-2008. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of lease line connectivity under service tax.
2. Taxability of refilling of cartridges under service tax.
3. Taxability of technical consultancy charges for software development under service tax.
4. Validity of the show cause notice based on an earlier notice.
5. Applicability of earlier Tribunal decision in a similar case to the present appeal.
6. Confirmation of short paid amount not disputed by the appellant.

Analysis:

1. Taxability of Lease Line Connectivity: The Tribunal found that the lease line connectivity provided by the appellant does not fall under the category of "Online Information and Database Access and Retrieval Services" for service tax purposes. The earlier Tribunal decision supported this view, leading to the impugned order being set aside in favor of the appellant.

2. Taxability of Cartridge Refilling: The Tribunal held that the activity of refilling cartridges is akin to a sale and does not attract service tax. The decision was influenced by the earlier ruling in a similar case, resulting in the dismissal of the demand for service tax on cartridge refilling.

3. Taxability of Technical Consultancy Charges: The charges for technical consultancy related to software development were deemed not liable for service tax under "Scientific or Technical Consultancy Services." Moreover, the Tribunal noted that even if the services were taxable, the demand could not be sustained for the period before 15.05.2008, which was the case in the present matter.

4. Validity of Show Cause Notice: The present show cause notice was based on an earlier notice, and the appellant argued that all disputed issues had been resolved in their favor in a previous Tribunal decision. The Tribunal acknowledged this argument and set aside the impugned orders due to the favorable precedent.

5. Applicability of Earlier Tribunal Decision: The Tribunal considered the earlier decision in the appellant's case, where all three disputed issues were resolved in their favor. This precedent played a crucial role in determining the outcome of the present appeal, leading to the setting aside of the impugned orders.

6. Confirmation of Short Paid Amount: While most of the demands were set aside in favor of the appellant, a small amount of ?7,454, which was not disputed by the appellant, was confirmed as short paid and deemed valid by the Tribunal.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal regarding the taxability of various services under service tax laws, the validity of show cause notices, and the significance of earlier Tribunal decisions in similar cases.