2019 (12) TMI 183 - AT - Service Tax

100% EOU - Classification of services - Online Information Database Access and Retrieval (OIDAR service) or not - developing and export of software - agreements with their group companies in Netherlands to avail various services which in the nature of providing internet connection and communication - Rule 2(1)(d)(iv) of Service Tax Rules, 1994 - Notification 36/2004 dated 31/12/2004 - Section 66A of Finance Act 1994 w.e.f. 18/04/2006 - CBEC Circular 275/7/2010-CX 8A dated 30/06/2010 - Services availed with respect to maintenance of various software - Commercial Coaching or Training Services -d Management Consultancy Services - penalty. HELD THAT - Regarding the OIDAR, Commissioner observes that there is a difference in the submissions of the appellant vide a written reply dated 03/11/2010 and 28/09/2010 and the submissions given during the personal hearing. However, learned Commissioner has not put forth any reasoning based on the facts of the case or the provisions under any contract. Therefore, it is to be held that the appellant s contentions were not countered with facts and therefore nothing has been brought on record to show that the appellant s contentions are factually incorrect - the appellants have a strong case in their favour. The appellants are not liable to pay any service tax regarding the OIDAR. Classification of services - Management, Maintenance or Repair Service or Information Technology Services - Services availed with respect to maintenance of various software - HELD THAT - Learned Commissioner has failed to appreciate the fact that upgradation of software etc falls under Information Technology Services - contentions of appellant are accepted that these are availed with respect to maintenance of various software and therefore it falls under Information Technology Services levied w.e.f. 16/05/2008 as has been held by this Bench in the case of SAP India Pvt. Ltd. 2010 (9) TMI 289 - CESTAT, BANGALORE . Commercial Coaching or Training Services - Management Consultancy Services - appellants have submitted that these services were mainly provided abroad and whenever they were performed in India they have discharged service tax - HELD THAT - Learned Commissioner observed that they have not produced any sort of evidence to prove this contention. No data has been provided in the appeal papers so as to enable this Bench to come to a conclusion - the issue requires to go back to the authorities to ascertain the duty liability on the appellant vis- -vis their claims - matter on remand. Penalty - HELD THAT - No service tax can be levied against the appellants in respect of OIDAR services and Management, Maintenance or Repair Services, the penalty levied to that extent under Section 76 Section 77 shall have to be set aside - the appellants are liable to pay service tax on Commercial Coaching Service and Management Consultancy Services rendered by the overseas agents availed in India. For the reason that the show-cause notice cannot invoke extended period, such liability will be restricted to normal period - Penalty under Section 76 77 will be levied by the original authority after re-quantifying the duty payable by the appellants in respect of Commercial Coaching Service and Management Consultancy Services for the normal period. The case remanded back to the original authority for the limited purpose of quantifying the service tax payable on Commercial Coaching Service and Management Consultancy Services for the normal period - appeal allowed in part by way of remand.

Summary

Issues:
1. Taxability of services provided by appellant under Online Information Database Access and Retrieval (OIDAR) service.
2. Tax liability on Management, Maintenance, and Repair Services.
3. Taxability of Commercial Coaching or Training Services.
4. Tax liability on Management Consultancy Services.
5. Calculation errors in the order.
6. Allegation of suppression and invocation of the extended period.
7. Waiver of penalty under Section 78.
8. Proper submission of data by the appellants.

Analysis:
1. OIDAR Services:
The appellant contended that the services provided did not fall under OIDAR as there was no provision of data or information from Philips Netherlands to the appellant for consideration. They argued that the services were akin to Telecommunication Services. Referring to Tribunal judgments and CBEC Circulars, the appellant asserted that they were not liable to pay service tax under OIDAR or Telecommunication Service. The Tribunal agreed with the appellant, emphasizing that the services provided were for intra-connectivity between Philips locations globally, not for online information or data retrieval. Hence, the appellants were not liable to pay service tax for OIDAR services.

2. Management, Maintenance, and Repair Services:
The appellant argued that these services, provided from outside India for software maintenance, were not taxable as they were not provided in India. Citing a Tribunal case, they claimed that such services were outside the service tax net until a specific date. The Tribunal concurred, stating that these services were not liable for service tax as they were provided from outside India and not in India.

3. Commercial Coaching or Training Services:
Regarding these services availed by employees visiting overseas locations, the appellant contended that since services were rendered outside India, they were not subject to service tax. However, the Tribunal found a lack of evidence to support this claim and remanded the issue to authorities for further examination.

4. Management Consultancy Services:
The appellant argued that as these services were received outside India, they were not liable for service tax. The Tribunal found merit in this argument and held that service tax on these services was not applicable as they were rendered outside India.

5. Calculation Errors and Allegation of Suppression:
The appellant highlighted calculation errors in the order and argued that the services in dispute were secondary services used in exporting primary services, making any tax paid revenue-neutral. They contended that the allegation of suppression was unfounded, and the extended period could not be invoked. The Tribunal agreed, emphasizing that the demand for the extended period was not sustainable.

6. Penalty Waiver and Proper Data Submission:
The appellant sought waiver of penalty under Section 78, which was granted by the Commissioner. They also stressed the proper submission of data regarding services availed in India and abroad. The Tribunal acknowledged the waiver of penalty and the importance of accurate data submission.

In conclusion, the Tribunal set aside the impugned order and remanded the case back to the original authority for quantifying the service tax payable on Commercial Coaching Service and Management Consultancy Services for the normal period, while ruling in favor of the appellant on other issues.