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2018 (6) TMI 644 - AT - Service TaxBusiness Support Services - Development and supply of contents - Information Technology Services - Reverse charge mechanism - appellant entered into an agreement with M/s.Verisign (Symantac) USA whereby appellant was authorized to use the software of digital signature and generate DSC (Digital Signature Certificate) and SSLC (Secured Socket Layer Certification) - Held that - From the detailed explanation of the activity put forward by the Ld.Counsel for appellant, it is found that any of the steps/process involved in issuing DSC would fall within the definition of Information Technology Services. Further, the software is owned by M/s.Verisign, USA and appellants have obtained only right to use the software. Therefore their activity does not involve any development of software, In fact appellants make use of the software already developed by M/s.Verisign and generate digital certificates. This is nothing but use of software just like use of windows software etc. The appellant issues DSC as per license issued to them by Controller of Certifying Authorities, Appellants have to follow the procedures prescribed under the Information Technology Act, 2000. Thus the activity of issuing DSC is statutorily recognised - The department vide letter dt.28.7.2008 has clarified that if the issuance of DSC does not involve development of IT Software, adoption or adaptation service related to IT software or certification of IT Software, the activity would not fall under Information Technology Services. When the process of issue of both these certificates are akin to each other, merely because SSLC is issued under voluntary requirement of the customer the same cannot be classified under Information Technology Services. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services provided by the appellant. 2. Taxability of Digital Signature Certificates (DSC) and Secure Socket Layer Certificates (SSLC). 3. Applicability of service tax under different categories for different periods. 4. Invocation of extended period for demand and imposition of penalties. Issue-wise Detailed Analysis: 1. Classification of Services Provided by the Appellant: The appellants are engaged in providing digital signature services under DSC and SSLC. The primary issue is the classification of these services under various taxable categories for different periods: - Business Support Services (BSS) from 1.5.2006 to 30.5.2007. - Development and Supply of Content from 1.6.2007 to 15.5.2008. - Information Technology Services from 16.5.2008 to 30.6.2012. 2. Taxability of Digital Signature Certificates (DSC): The appellant, a certifying authority under the Information Technology Act, 2000, issues DSCs which have statutory recognition. The process involves verifying credentials, uploading information to Verisign's software, and generating DSCs using the software. The Central Board of Excise and Customs (CBEC) clarified that issuance of DSCs does not fall under Technical Inspection and Certification Service, Business Auxiliary Service, or Business Support Service. The CBEC further noted that if the issuance of DSCs does not involve activities related to IT software development, adaptation, or certification, it would not fall under Information Technology Services. 3. Taxability of Secure Socket Layer Certificates (SSLC): SSLCs provide secure data transmission over the internet and are not statutorily recognized like DSCs. The appellant's role in issuing SSLCs is similar to DSCs, involving procurement of orders, collecting credentials, and uploading them to Verisign's software. The CBEC's clarification on DSCs was extended to SSLCs, noting that the process does not involve IT software development or related activities. The Commissioner initially classified SSLCs under BSS, Development and Supply of Content, and Information Technology Services for different periods, but the tribunal found these classifications unsustainable. 4. Invocation of Extended Period for Demand and Imposition of Penalties: The appellant argued that the extended period for demand was unjustified as the department was aware of the facts through letters and clarifications sought by the appellant. The tribunal agreed, noting that the issue involved taxability and classification, and the appellant had a bona fide belief that their activities were not taxable. The invocation of the extended period was deemed without basis. Conclusion: The tribunal found that the activities of issuing DSCs and SSLCs by the appellant do not fall under the taxable categories specified by the department. The CBEC's clarifications supported the appellant's position that their activities did not involve IT software development or related services. Consequently, the tribunal set aside the impugned order, allowing the appeal with consequential reliefs. The tribunal also noted that the invocation of the extended period for demand and imposition of penalties was unjustified.
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