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2021 (2) TMI 513 - HC - Service TaxExtended period of limitation - demand under the head maintenance and repair of computer software - validity of circular dated 17.12.2003 - Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the demand is raised beyond the normal period of limitation, resulting in undue gains to the Respondent? - HELD THAT - Admittedly as per the stand taken by the respondent themselves before the High Court of Madras, it is evident that activity of maintenance of computer software was exempt from the provisions of the Act prior to 2006. We are in agreement with the view taken by the High court of Madras in KASTURI SONS LTD, CHENNAI VERSUS UNION OF INDIA OTHERS 2011 (2) TMI 76 - HIGH COURT OF MADRAS , where it was held that There was no occasion to consider the implications of the Finance Act 2003 to 2006 in respect of the terms 'information technology' and 'maintenance of software' and the decision rendered in Tata Consultancy Service v. State of Andhra Pradesh 2004 -TMI - 4143 - Supreme Court in the context of the said Act under Entry 54, List-II of VII Schedule to the Constitution cannot be cited for a clarification in respect of the Finance Act, 1994 which is a Parliamentary enactment. It is pertinent to mention here, that in the show cause notice itself no allegations of fraud collusion, misstatement or suppression of facts have been stated against the respondent, therefore, the demand is barred by limitation under Section 73 of the Finance Act, 1994 as well. The substantial questions of law are answered in against the appellant and favour of the respondent - Appeal dismissed.
Issues:
1. Interpretation of statutory provisions enacted by Parliament. 2. Validity of demand raised beyond the normal period of limitation. Analysis: 1. The appellant filed an appeal challenging the judgment of the Customs, Excise and Service Tax Appellate Tribunal regarding the liability to pay service tax for maintenance and repair of computer software for the period from 09.07.2004 to 06.10.2005. The substantial questions of law raised were whether the Tribunal overlooked facts and statutory provisions enacted by Parliament and whether the demand was raised beyond the normal period of limitation. The respondent was initially exempt from paying service tax under a Notification dated 21.08.2003, but the exemption was withdrawn by a subsequent Notification dated 09.07.2004. A show cause notice was issued demanding service tax of &8377;3,41,63,132/- for the period in question. The adjudicating authority held the respondent liable, but the tribunal allowed the respondent's appeal, citing that the demand was barred by limitation and there was doubt regarding the levy of tax. 2. The appellant argued that the respondent was liable to pay service tax for the period in question as the exemption was withdrawn with effect from 09.07.2004. It was contended that the respondent failed to pay service tax for taxable services under the Act, justifying the application of the extended period of limitation. On the other hand, the respondent's counsel referred to a decision of the High Court of Madras and argued that the demand raised by the appellant was barred by limitation. The High Court analyzed the statutory provisions and the historical context of the Finance Acts to determine the liability for service tax on maintenance of computer software. 3. The High Court examined the Finance Acts of 2003, 2004, and 2007 to understand the evolution of the term "goods" to include computer software for service tax purposes. It referred to the decision of the Madras High Court in 'KASTURI AND SONS VS. UNION OF INDIA' to establish that the maintenance of computer software was exempt from service tax before 2006. The Court highlighted that no allegations of fraud, collusion, or suppression of facts were made against the respondent in the show cause notice, leading to the conclusion that the demand was barred by limitation under Section 73 of the Finance Act, 1994. Ultimately, the High Court dismissed the appeal, upholding the tribunal's decision in favor of the respondent based on the legal interpretation and factual findings presented. In conclusion, the High Court's judgment addressed the issues of statutory interpretation and limitation period in the context of service tax liability for maintenance and repair of computer software, ultimately ruling in favor of the respondent based on the legal principles and factual circumstances analyzed during the proceedings.
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