2018 (4) TMI 1094 - AT - Service Tax

Technical Testing and Analysis Services - testing customers software - liability of service tax - Held that - The testing of Information Technology Software was specifically brought under the category with effect from 16.05.2008 - The period is prior to 16.05.2008 and as the testing of Information Technology Software was specifically brought under the category with effect from 16.05.2008, there is no justifiable reason to uphold the demand. Appeal allowed - decided in favor of appellant.

Summary

Issues: Liability to service tax for testing customers' software under "Technical Testing and Analysis Services" for the period 01.07.2003 to 31.12.2005.

The judgment by the Appellate Tribunal CESTAT Chennai addressed the issue of liability to service tax for testing customers' software under the category of "Technical Testing and Analysis Services" for the period from July 2003 to December 2005. The appellant contended that prior to May 16, 2008, the definition of the services in question related to "Testing and Analysis of various goods or materials or any Immovable Property," and the testing of Information Technology Software was specifically included under this category only from May 16, 2008 onwards. The Tribunal referred to the case of M/s. Relq Software Pvt. Ltd. Vs Commissioner of Service Tax, Bangalore, where it was established that Testing and Analysis of Software was not a taxable service before May 16, 2008. This decision was further upheld by the Hon'ble Karnataka High Court in the case Commissioner of Service Tax, Bangalore Vs M/s. Relq Software Pvt. Ltd., dismissing the Revenue's appeal due to a technical issue regarding jurisdiction. Additionally, the Tribunal cited the case of Commissioner of Central Excise, Pune Vs M/s. Aztecsoft Ltd., which also supported the non-taxability of software testing before May 16, 2008.

In analyzing the issue, the Tribunal emphasized that the matter was no longer res integra, as previous decisions had conclusively established that testing and analysis of software were not subject to service tax before May 16, 2008. Given that the period in question in the present appeal was prior to this date and the specific inclusion of Information Technology Software testing under the taxable category only from May 16, 2008, the Tribunal found no valid justification to uphold the demand for service tax. Consequently, the impugned orders holding the appellants liable for service tax were set aside, and the appeal was allowed with consequential relief granted to the appellants. The judgment was pronounced in open court by the Tribunal.