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2020 (2) TMI 1392 - AT - Service TaxNon-payment of Service Tax - Maintenance Repair Service - Business Support Service - Management Consultancy Services - Business Auxiliary Services - it appeared to Revenue that appellant had not discharged their service tax properly. Maintenance and Repair Service relating to software - HELD THAT - The issue is no longer res integra and the said issue was decided in appellant s own case by coordinate Bench of this Tribunal, reported as M/S SAP INDIA PRIVATE LIMITED VERSUS CCE, BANGALORE-III 2010 (9) TMI 289 - CESTAT, BANGALORE wherein the issue was whether the software maintenance was taxable under the head Management, Maintenance and Repair Service under Service Tax Provisions, as information technology support services was introduced w.e.f. 16/05/2008. Further there was amendment in the maintenance or repair services w.e.f. 01/06/2007, clarifying that goods are inclusive of computer software and including maintenance or repair of information technology software. Business Support Services - Appellant submits that it is with respect to using of dedicated leased line provided by the overseas service provider - HELD THAT - This issue is also settled in favour of the appellant as has been held by co-ordinate Bench in TCS E-SERVE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI 2014 (6) TMI 655 - CESTAT MUMBAI , that for eligibility, the service provider has to be a Telegraph Authority as defined in Section 65(105)(zzzx) of the Finance Act. Further as per CBEC instructions F.No.137/21/2011 dt. 15/07/2011, the service tax shall not be payable where service is provided by foreign vendor and such foreign vendor is not the Telegraph Authority under the Indian Telegraph Act. Management consultancy services - issue is in respect of implementation of Enterprise Resource Planning (ERP) - Case of appellant is that such activity of the ERP falls under Consulting Engineering Services and further Software Engineering Consultancy is exempted from the purview of service tax - HELD THAT - The said issue has also been considered by the Tribunal in the case of IBM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE 2009 (4) TMI 314 - CESTAT, BANGALORE wherein it was observed that ERP implementation service is definitely for use in furtherance of business and commerce and the service is for implementation. Such implementation of ERP service is specifically covered under clause (iii) in the definition of ITSS, where it is provided that (iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software. Although in appeal No.ST/1881/2011, the period falls partly before and after 16/05/2000, however, there is no proposal to levy tax under the head ITSS, we hold that the appellants are not liable to pay service tax under the Management Consultancy Services - decided in favor of appellant. Engagement of overseas agency by the appellant for advertising and sales promotion outside India (Srilanka and Bangladesh) - HELD THAT - This Tribunal in the case of Genom Biotech Pvt. Ltd. Vs. CCE C, Nashik 2016(42) STR 918 (Tri. Mum.) has held that the assessee had availed advertising agency services through overseas service providers for providing advertisement and sales promotion service in the territory of Ukraine, the appellant M/s. Genom Biotech was manufacturers of trucks which was exported to Ukraine. Under such circumstances, this Tribunal held that the services that are not connected with the manufacture or with the transport of goods till the customs frontier of the country, can be disassociated from use within the country and hence would not lie within the ambit of legal fiction of import of services. Appeal allowed - decided in favor of appellant.
Issues involved:
1. Service tax liability on maintenance and repair service for software. 2. Service tax liability on business support services. 3. Service tax liability on management consultancy services. 4. Taxability of engagement of overseas agency for advertising and sales promotion. Issue 1: Service tax liability on maintenance and repair service for software: The appellant, engaged in importing software and providing maintenance services, faced a service tax dispute. The Tribunal analyzed the issue in light of previous judgments and legislative amendments. It was established that maintenance of software falls under information technology software services, not maintenance or repair services. The Tribunal held that the maintenance charges collected were not subject to service tax under the specific entry for maintenance or repair services. The demand for service tax and penalties were set aside in favor of the appellant. Issue 2: Service tax liability on business support services: The appellant's eligibility for service tax on business support services, related to using a leased line from an overseas provider, was disputed. Referring to a precedent case, it was clarified that the service provider must be a 'Telegraph Authority' for service tax eligibility. Citing CBEC instructions, it was noted that service tax is not payable if the foreign vendor is not a 'Telegraph Authority' under Indian law. The issue was settled in favor of the appellant based on legal interpretations and guidelines. Issue 3: Service tax liability on management consultancy services: Regarding management consultancy services for Enterprise Resource Planning (ERP) implementation, the appellant contended that it falls under exempted categories. The Tribunal referred to relevant case law and definitions to determine that ERP implementation services are covered under information technology software services. As the appellant had paid applicable service tax under ITSS, the demand for service tax under management consultancy services was dismissed in favor of the appellant. Issue 4: Taxability of engagement of overseas agency for advertising and sales promotion: The appellant engaged overseas agencies for advertising and sales promotion outside India. Citing a relevant case, the Tribunal clarified that services not connected to goods' manufacture or transport to India are not within the ambit of import of services. The ruling emphasized that tax should not burden export goods and services rendered outside India are not subject to Indian taxation. The issue was resolved in favor of the appellant based on the legal interpretation of cross-border transactions. In conclusion, the Tribunal set aside the impugned orders in favor of the appellant for all issues discussed, granting them consequential benefits in accordance with the law. The detailed analysis and legal interpretations provided clarity on the service tax liabilities and resolved the disputes effectively.
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