2023 (6) TMI 1003 - HC - Service Tax

Levy of Service Tax - Business Auxiliary Service - commission / remuneration received by the Respondent Assessee from its parent Company - Online Information and Database Access or Retrieval Services - payment of Annual License fee to its parent Company - period prior to 2008. Business Auxiliary Service - commission / remuneration received by the Respondent Assessee from its parent Company - HELD THAT - Both the parties agree that the issue is covered by the decision of this Court in the case of Respondent Assessee itself by the judgment in THE COMMISSIONER SERVICE TAX-VII VERSUS M/S. WARTSILA INDIA LTD. 2018 (9) TMI 1521 - BOMBAY HIGH COURT wherein this Court has held that services of procuring orders and passing it to its overseas principal and receiving payments for the same in foreign exchange is an activity of export of services covered by the Export of Services Rules, 2005 - the Appellant Revenue has not brought to attention that the decision of this Court, referred to hereinabove, is stayed - the issue raised is covered by the decision of this Court, no substantial question of law arises for consideration. Classification of services - whether annual license fee charged by Wartsila Corporation, England, for certain software licenses is covered by the entry Information Technology Software Services, which was taxable from 16th of May 2008 or whether same falls within the entry Online Information and Database Access or Retrieval Services as contended by the Revenue? - HELD THAT - The Appellant Revenue has accepted the classification of the said service under the head Information Technology Software Service post 2008. In our view, if the Appellant Revenue has accepted the classification of entry under the head Information Technology Software Service for the period post 2008, then it cannot be contended by the Appellant Revenue that pre 2008 that very service falls under the entry Online Information and Database Access or Retrieval Services . The Tribunal in its order has given a finding of fact that the reasoning of the original authority is bereft of any examination of the taxable entry connected with the definition and bereft of even alluding to the activities of the overseas entity for ascertainment of delivery of service to the Assessee. It is settled position, by the ratio of decisions of the Apex Court in the case of Balaji Enterprises vs. CCE, 1997 (5) TMI 108 - SUPREME COURT and decision of this Court in the case of Indian National Shipowners Association 2009 (3) TMI 29 - BOMBAY HIGH COURT , that an introduction of a fresh entry from a particular date pre-supposes that the said services were not covered by the earlier entries. It is not the contention of the Appellant Revenue that the 2008 insertion of entry Information Technology Software Services is retrospective - thus, no substantial question of law arises with respect to this question. Appeal of Revenue dismissed.

Summary

Issues involved:
The issues involved in the judgment are:
1. Whether the Respondent Assessee is liable to pay tax under the head "Business Auxiliary Service" on commission received from its parent Company?
2. Whether the Respondent Assessee is liable to pay tax for the period prior to 2008 under the entry "Online Information and Database Access or Retrieval Services" on payment of Annual License fee to its parent Company?

Issue 1: Tax liability under "Business Auxiliary Service"
The Court noted that the issue was previously addressed in a decision where it was held that procuring orders and receiving payments in foreign exchange constitutes export of services. The Appellant Revenue mentioned that the decision was challenged in the Supreme Court, but did not indicate any stay on the decision. As both parties agreed that the issue was settled by the previous decision, the Court concluded that no substantial question of law exists for consideration.

Issue 2: Tax liability for Annual License fee
Regarding the taxability of the annual license fee, the Tribunal found that the Assessee had paid tax under the "Information Technology Software Service" category since May 2008. The Appellant Revenue accepted this classification post-2008. The Court reasoned that if the Revenue accepted the post-2008 classification, it cannot argue that the same service was taxable under a different category pre-2008. The Tribunal also noted that the original authority did not adequately examine the taxable entry or activities of the overseas entity. Referring to legal precedents, the Court emphasized that the introduction of a new entry implies that the services were not covered by earlier entries. As the Revenue did not claim the 2008 entry to be retrospective, the Court found no substantial question of law regarding this issue.

Conclusion:
The appeal by the Revenue was dismissed as the Court found no substantial questions of law for consideration based on the settled positions and accepted classifications post-2008.