2017 (12) TMI 1190 - AT - Service Tax

Sale of Packaged Software - demand on the ground that during impugned period 01.04.2006 to 15.05.2008 and 27.02.2010 to 31.03.2011 their services were not taxable and hence the amount recovered from customers representing service tax is liable to be paid in terms of Section 73A (2) - Appellant had claimed that they have discharged the service tax liability from their cenvat credit account which accrued to them as a result of service tax charged by their suppliers and nothing remains to be paid - Held that - the claim of the Appellant regarding eligibility to claim cenvat credit and actual availability of cenvat credit to them remains to be verified against their service tax liability which has not been verified by the revenue. In such case if the Appellant is able to show that they had received cenvat credit charged from their suppliers which utilized for payment of their service tax liability in that case there cannot be any demand against the Appellant - case remanded to the original authority for denovo consideration - appeal allowed by way of remand.

Summary

Issues Involved:
- Taxability of services provided by the Appellant under the category of Management, Maintenance, or Repair Services.
- Allegations of collecting service tax on the sale of packaged software without discharging the tax liability.
- Claim of cenvat credit by the Appellant for software packages purchased from suppliers.
- Dispute regarding the taxability of trading packaged or canned software under Information Technology and Software Services.
- Confirmation of demand, interest, and penalties by the adjudicating authority.
- Arguments regarding the transfer of copyright in software transactions and applicability of service tax.
- Reliance on legal precedents and government notifications to support the Appellant's position.
- Lack of independent verification of records and documents by the revenue department.
- Disagreement on the liability of the Appellant to pay the demanded amount.
- Need for verification of invoices, records, and eligibility of cenvat credit by the revenue department.

Detailed Analysis:
1. The Appellant was registered for Service tax under Management, Maintenance, or Repair Services but faced allegations of collecting service tax on the sale of packaged software without discharging the tax liability. The revenue department issued a show cause notice based on the statement of a director regarding the collected service tax amount. The Appellant claimed cenvat credit for software packages purchased from suppliers, arguing they are not liable to tax under Information Technology software category.

2. The adjudicating authority held the trading of packaged software by the Appellant as taxable under Information Technology and Software Services for a specific period, confirming demands, interest, and penalties. The Appellant's representative argued the nature of their transactions, citing legal precedents and government notifications to support their position.

3. The Appellant's representative highlighted the specifics of the software transactions, emphasizing the non-transfer of copyright and the applicability of service tax. They argued that since they received bills charging service tax from vendors, they availed cenvat credit and paid service tax on input services. They contested the revenue's reliance on the director's statement without independent verification of records.

4. The revenue department reiterated the findings of the impugned order, supporting the demand against the Appellant. The Tribunal carefully considered both sides' submissions and found discrepancies in the verification of cenvat credit utilization and the taxability of the services provided by the Appellant.

5. The Tribunal remanded the case to the original authority for denovo consideration, emphasizing the need for verification of invoices, records, and the Appellant's eligibility for cenvat credit. The decision left all issues open for further examination, recognizing the complexity of the taxability and credit utilization aspects in the case.

This detailed analysis outlines the legal complexities and arguments presented in the judgment, focusing on the taxability of services, cenvat credit claims, and the need for thorough verification before confirming the demand against the Appellant.