2017 (4) TMI 861 - HC - Service Tax

Computer training services - Held that - the Tribunal held that in the facts and circumstances, the demand within the limitation and normal period deserves to be confirmed. The demand beyond the normal period cannot be confirmed and no suppression is proved. Manpower recruitment service - Held that - The law was amended and it is only from 16th June, 2005 that manpower recruitment or supply to third parties is brought within the net of the tax - the assessee was held liable to pay service tax with effect from 16th June, 2005 under that category. Intellectual property service - Business support service - Held that - the respondent assessee has the property rights over a software, which was allowed to be used by their clients. That is why the demand within the limitation period was confirmed - As far as the business support service is concerned, even on that count the demand is confirmed. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to the order passed by CESTAT by the revenue.
2. Service tax appeal of the assessee being allowed.
3. Three issues involved leading to a demand of ?4,99,07,210/- with interest and penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The first issue pertains to the challenge brought by the revenue against the order passed by CESTAT. The Tribunal confirmed the demand within the limitation and normal period for computer training services based on notifications exempting service tax for such services. However, the demand beyond the normal period was not confirmed due to lack of proof of suppression of facts by the assessee. The Tribunal's decision was upheld, dismissing the appeal by the revenue.

2. The second issue involves the service tax appeal of the assessee being allowed. Regarding manpower recruitment services, the assessee was providing employees temporarily to software companies before the amendment bringing such services under the tax net from 16th June, 2005. The demand prior to this date was set aside, leading to a reduction in penalty. The decision on this issue favored the assessee, resulting in the reduction of penalty.

3. The third issue concerns intellectual property service and business support service. The Tribunal confirmed the demand within the limitation period for intellectual property service, considering the property rights over software held by the assessee. Similarly, the demand for business support service was also confirmed. The Tribunal did not find suppression of facts by the assessee to evade payment of duty, leading to the dismissal of the appeal by the revenue. The Tribunal's decision was upheld as not being vitiated by any error of law or fact, resulting in the appeal being devoid of merits and dismissed with no order as to costs.