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2019 (5) TMI 716 - AT - Service TaxTime Limitation - Maintenance or Repair of Software service - whether the demand on Maintenance or Repair of Software set aside by Commissioner (Appeals) on the ground of limitation requires to be interfered or not? - HELD THAT - The definition of Maintenance or Repair Service under section 65(64) of the Finance Act, 1994 was amended and the explanation stated therein that the term goods includes software was introduced with effect from 16-5-2008. Prior to 16-5-2008, there was confusion as to the leviability of Service Tax on Maintenance or Repair of Software. It is very much clear that during the disputed period that there was utter confusion with respect to levy of Service Tax on Maintenance or Repair of Computer Software. The Commissioner (Appeals) has discussed in detail with regard to the said circulars and notifications. He has thereafter set aside the demand on Maintenance or Repair of Software to be not sustainable as the ingredients to invoke the extended period are absent. CENVAT Credit - input services - Telephone Services - Mediclaim Insurance of employees - HELD THAT - The period in question is prior to 1-4-2011 when the definition of Input services had a wide ambit as it included almost all activities related to business - credit allowed. Appeal dismissed - decided against Revenue.
Issues:
1. Liability for service tax on Maintenance and Repair of Software for a specific period. 2. Eligibility of availed Cenvat credit on Telephone Service and Mediclaim Insurance. 3. Interpretation of conflicting notifications and circulars regarding the levy of Service Tax on Maintenance or Repair of Software. Analysis: Issue 1: Liability for service tax on Maintenance and Repair of Software The case involved a dispute regarding the liability of the appellants to pay Service Tax for the activity of Maintenance or Repair of Software for the period from 9-7-2004 to 30-8-2005. The original authority confirmed the demands, but the Commissioner (Appeals) set aside the demand on the ground of limitation. The Revenue argued that the services were taxable during the disputed period based on relevant notifications and circulars. The Tribunal noted the confusion regarding the levy of Service Tax on Maintenance or Repair of Software during the disputed period. The Hon'ble jurisdictional High Court had previously struck down a circular stating that such services were taxable. The Commissioner (Appeals) had detailed discussions on the circulars and notifications, ultimately setting aside the demand as the extended period criteria were not met. The Tribunal upheld the Commissioner's decision, stating that there was no ground to interfere with it. Issue 2: Eligibility of availed Cenvat credit The appellants had availed Cenvat credit on Telephone Service and Mediclaim Insurance of employees for the period 2005-06. The department considered these credits as ineligible input services. However, the Commissioner (Appeals) analyzed the issue and concluded that the appellants were eligible for the credit. The Tribunal agreed with the Commissioner's decision, stating that the definition of "Input services" at that time had a broad scope, including almost all activities related to business. Therefore, the demand alleging wrongful credit was set aside by the Commissioner (Appeals) and upheld by the Tribunal. Issue 3: Interpretation of conflicting notifications and circulars The case involved conflicting notifications and circulars regarding the levy of Service Tax on Maintenance or Repair of Software. The Revenue argued that the appellants had suppressed facts with intent to evade payment of Service Tax, justifying the invocation of the extended period. However, the Tribunal noted the confusion prevailing during the disputed period due to contradictory circulars and notifications. The Commissioner (Appeals) had thoroughly discussed the circulars and notifications, ultimately setting aside the demand as the criteria for invoking the extended period were not met. The Tribunal agreed with the Commissioner's analysis, dismissing the appeal filed by the department. In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the appeal filed by the department concerning the liability for service tax on Maintenance and Repair of Software and the eligibility of availed Cenvat credit. The judgment highlighted the confusion surrounding the levy of Service Tax during the disputed period due to conflicting notifications and circulars, ultimately leading to the decision in favor of the appellants.
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