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2016 (9) TMI 375 - AT - Service TaxDemand - Maintenance and Repair Services - maintenance of computer software services - period involved is 9.7.04 to 31.3.06 - Held that - by following the decision of Tribunal in the case of Polaris Software Lab Ltd. vs. CCE, Chennai 2015 (10) TMI 2410 - CESTAT CHENNAI , by taking note of the Hon ble Madras High Court decision in the case of Kasturi & Sons Ltd. vs. UOI - 2011 (2) TMI 76 - HIGH COURT OF MADRAS wherein it was held that the maintenance of Computers software became taxable service with effect from 1.6.2007 when the amendment was specifically brought under section 65 of the Finance Act, demand is not sustainable as the period in the present appeal is prior to 1.6.2007. Demand - Business Auxiliary services - service of digital scanning data processing and data entry services to the Income Tax department - Held that - the Tribunal in the case of K P Rao Company, has considered the identical issue and has held that the said services did not fall under the category of Business Auxiliary services and would be properly classifiable under Information Technology services. Inasmuch as the information technology services was taxable with effect from 10.5.2008 and the period involved in the present appeal is prior to that, the demand on this issue is also not sustainable. - Appeal disposed of
Issues:
1. Service tax demand on maintenance and repair activity for computers. 2. Service tax demand on maintenance of computer software services. 3. Service tax demand on digital scanning data processing and data entry services. Maintenance and Repair Activity for Computers: The judgment confirms the demand of service tax against the appellant for maintenance and repair activity carried out for computers, computer systems, and peripherals. The appellant has not contested this demand and has paid the same along with interest and penalties. Therefore, the demand in this regard is upheld as uncontested. Maintenance of Computer Software Services: The second part of the demand pertains to maintenance of computer software services. The Revenue treated this as falling under maintenance and repair services for the period from 9.7.04 to 31.3.06. However, the Tribunal, citing previous decisions, noted that maintenance of computer software became a taxable service only from 1.6.2007. As the period in question predates this amendment, the demand on this account is deemed unsustainable, following the precedent set by previous decisions. Digital Scanning Data Processing and Data Entry Services: The third part of the demand concerns services of digital scanning data processing and data entry provided to the Income Tax department. The Revenue taxed these services under Business Auxiliary services, rejecting the appellant's claim that they should be classified as information technology services. The Tribunal, referring to a similar case, held that these services do not fall under Business Auxiliary services but should be classified as Information Technology services. Since information technology services became taxable from 10.5.2008 and the period in question is prior to that, the demand on this issue is also deemed unsustainable. Consequently, the demand related to digital scanning data processing and data entry services is set aside. The judgment concludes by disposing of the appeal in the manner outlined above, with the demands on maintenance and repair of computers and computer systems being upheld as uncontested, while the demands related to maintenance of computer software services and digital scanning data processing and data entry services are set aside.
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