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2008 (1) TMI 156 - AT - Service TaxProviding computer software- related service required for operation of Automated Teller Machines under AMC Assessee contending this activity exempt under business auxiliary services revenue contending it as maintenance or repair services - case of the Revenue on strength of Not. 7/04 & circulars 7/3/06 cannot be prima facie accepted - other demand under technical inspection & certification services stands satisfied, albeit under protest - waiver of pre-deposit & stay granted
Issues:
1. Applicability of service tax on 'Maintenance and Repair Services' provided under Annual Maintenance Contracts (AMC). 2. Interpretation of Notifications and Circulars related to service tax on maintenance or repair of computer software. 3. Exemption from service tax on maintenance of computer software under business auxiliary services. 4. Payment of service tax under protest for 'Technical Inspection and Certification Services'. Analysis: Issue 1: Applicability of service tax on 'Maintenance and Repair Services' under AMC The judgment pertains to a case where the Commissioner confirmed a demand of service tax against the appellants for providing 'Maintenance and Repair Services' under AMC for computer software. The appellants argued that the service fell under information technology service exempt from service tax under business auxiliary services. However, the adjudicating authority considered the activity as taxable under 'maintenance or repair services'. The Revenue relied on Notification No. 20/2003-S.T. and a Board's Circular, but the Tribunal found that these pertained to hardware maintenance, not software. The Tribunal accepted the appellants' argument that maintenance of computer software was part of information technology service prior to a certain date and that they started paying service tax accordingly. The appellants also highlighted their payment under protest following a Circular by C.B.E.C. related to software maintenance, which was not contested. Issue 2: Interpretation of Notifications and Circulars The Tribunal analyzed the Notifications and Circulars related to service tax on maintenance or repair of computer software. It noted that the Notifications exempted maintenance or repair of computer hardware, not software. The Tribunal found that the Revenue's argument based on these Notifications and Circulars could not be accepted prima facie. The Tribunal considered the evolution of definitions related to information technology service and business auxiliary services to determine the applicability of service tax on maintenance of computer software. Issue 3: Exemption under business auxiliary services The Tribunal examined whether the maintenance of computer software fell within the exemption under business auxiliary services. It considered the appellants' submission that such maintenance was part of information technology service exempt from service tax until a certain date. The Tribunal found a prima facie case for the assessee in relation to the demand of service tax on 'Maintenance and Repair Services', leading to a waiver of pre-deposit and stay of recovery. Issue 4: Payment under protest for 'Technical Inspection and Certification Services' Regarding 'Technical Inspection and Certification Services', the Tribunal noted that service tax was paid along with interest under protest. The demand for this category of services was satisfied under protest, leading to a waiver of pre-deposit and stay of recovery. In conclusion, the Tribunal found in favor of the appellants regarding the demand of service tax on 'Maintenance and Repair Services' under AMC, considering the evolution of relevant definitions and exemptions. The judgment highlights the importance of interpreting Notifications and Circulars accurately to determine the applicability of service tax on specific services.
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