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Issues involved: Determination of entitlement to exemption under Service Tax Notification No. 20/2003 for services rendered in relation to maintenance of hardware and software of MICR Cheque Processing Solution.
Summary: The appeal was filed against Order-in-Original No. 65/2006 passed by the Commissioner of Service Tax, Bangalore. The issue revolved around whether the services provided by the appellant qualified for exemption under Service Tax Notification No. 20/2003. The appellant had a contract with the Reserve Bank of India for maintenance of the MICR Cheque Processing Solution. The Department contended that the services did not qualify for exemption as they were not related to a computer or computer system. The lower authority relied on a Board's clarification regarding ATM machines to deny the exemption. The appellant challenged this decision, providing detailed information about the system and its components, including photographs and contractual agreements. Upon review, the Tribunal found that the entire MICR Cheque Processing Solution, including the mainframe system, imaging hardware, software, and document processor with stacker modules, should be considered a computer system during the relevant period. The Tribunal disagreed with the lower authority's classification and held that the appellant was entitled to the benefit of the exemption Notification. Consequently, the appeal was allowed with consequential relief.
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