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2013 (11) TMI 1462 - AT - Service TaxMaintenance of software - Held that - explanation appearing under the meaning of the term management, maintenance or repair defined by Section 65(105)(zzg) of Finance Act, 1994 specifies that goods includes computer software. The explanation operates like a charging provision from 1-6-2007 incorporated into law by Finance Act, 2007. This explanation cannot be read as retrospective in nature following the ratio laid down in Martin Lottery case 2009 (5) TMI 1 - SUPREME COURT OF INDIA and the appellants shall not be brought to the ambit of tax for the period 9-7-2004 to 30-9-2005 when the explanation was inserted to the above section w.e.f. 1-6-2008 by Finance Act of 2007 - Decided in favor of assessee.
Issues:
1. Jurisdiction of Division Bench over the matter. 2. Taxability of maintenance of software during the period 9-7-2004 to 30-7-2005. 3. Ex parte stay order and recall. 4. Interpretation of Notification No. 20/2003 and No. 7/2004. 5. Applicability of Finance Act, 2007 on computer software. Jurisdiction of Division Bench: The appellant challenged the taxability of maintenance of software during a specific period, arguing that the jurisdiction of the Division Bench was required to determine the liability. The Division Bench recalled the ex parte stay order, citing the J.K. Synthetics v. UOI case, emphasizing the mandate of the Statute for the appeal to be maintainable before the Division Bench. Taxability of Maintenance of Software: The appellant contended that maintenance of software was not taxable during the period in question based on Notification No. 20/2003 and No. 7/2004. The appellant argued that software was considered goods under Section 65(105)(zzg) of the Finance Act, 2007, making it taxable from 1-6-2007. The explanation under the Act was not retrospective, as per the Martin Lottery case, relieving the appellants from tax liability during the specified period. Both the stay application and appeal were allowed on this ground. Ex Parte Stay Order and Recall: The stay application was initially decided ex parte with directions for tax and penalty deposits. However, a subsequent application highlighted the jurisdiction of the Division Bench, leading to the recall of the ex parte stay order by the Division Bench. Interpretation of Notifications and Finance Act: The appellant and the authority below presented arguments regarding the interpretation of Notification No. 20/2003 and No. 7/2004, which granted exemptions to maintenance and repair of computer software. The Finance Act, 2007's impact on computer software taxability was also discussed, emphasizing the non-retrospective nature of the explanation under the Act. Applicability of Finance Act, 2007: The Finance Act, 2007's provisions on computer software taxability were crucial in determining the appellant's liability for maintenance of software during the relevant period. The explanation under Section 65(105)(zzg) clarified the inclusion of computer software as goods, affecting the tax implications from 1-6-2007 onwards. The judgment considered these provisions and their retrospective nature in deciding the tax liability issue.
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