9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 746 - SC - Service TaxClassification of services - Information Technology Software service or Intellectual Property Service? - period from 1st April 2004 to 31st March 2009 - whether in respect of the particular transactions, service tax was payable under the classification mentioned in the show cause notices? HELD THAT - Clause (e) of subsection (1) of Section 26 refers to exemption from service tax under the Finance Act on taxable services provided to a developer or unit to carry on authorised operations in SEZ. Under Subsection (1) of Section 51, SEZ Act prevails over other enactments which are inconsistent to the provisions contained therein. Thus, only when by exercising the power under subsection (2) of Section 26 of SEZ Act, an exemption is granted by the Central Government that the assessee can claim exemption. There are no fault with the reasoning adopted by CESTAT. However, in the proceedings pursuant to remand, it will be open for the assessee to show that an exemption was available under subsection (2) of Section 26 of the SEZ Act. It is also held that octroi charges are in the nature of levy for transportation of goods. Therefore, octroi charges cannot be a part of the value of the taxable services. However, a remand was ordered to enable the assessee to produce evidence regarding the amounts paid towards octroi charges. Appeal dismissed.
Issues Involved:
1. Legality of service tax demand under the first show cause notice. 2. Classification of services for the period from 16th May 2008. 3. Exemption under SEZ Act for services supplied to SEZ units. 4. Inclusion of octroi charges in the value of taxable services. Summary: 1. Legality of Service Tax Demand under the First Show Cause Notice: The first issue pertains to the service tax demand under the first show cause notice dated 19th October 2009, covering the period from 1st April 2004 to 31st March 2009. The demand was for the taxable service of "Management, Maintenance and Repair." The CESTAT found that the service of transfer of intellectual property rights was classifiable under the category of "Intellectual Property Service" till 16th May 2008 and was taxable under Section 65(105)(zzr) of the Finance Act. Post 16th May 2008, this service was reclassified under "Information Technology Software" as per Section 65(53a) of the Finance Act. The CESTAT deemed the first show cause notice illegal due to incorrect classification. The Supreme Court upheld this finding, emphasizing that adjudication should be based on the classification stated in the show cause notice. 2. Classification of Services for the Period from 16th May 2008: The other three show cause notices correctly classified the services under "Information Technology Software." The Supreme Court found no merit in interfering with the findings of CESTAT, which were based on a careful consideration of factual and legal aspects. The CESTAT had correctly identified the classification and the corresponding service tax liability. 3. Exemption under SEZ Act for Services Supplied to SEZ Units: The CESTAT addressed the argument regarding the exemption under the SEZ Act. Subsection (2) of Section 26 of the SEZ Act allows the Central Government to prescribe exemptions for services provided to SEZ units. The CESTAT held that the exemption was not available directly to the service provider but could be claimed as a refund by the SEZ developer or unit. The Supreme Court upheld this reasoning but allowed the assessee to show evidence of exemption under subsection (2) of Section 26 of the SEZ Act during the remand proceedings. 4. Inclusion of Octroi Charges in the Value of Taxable Services: The CESTAT held that octroi charges, being levies for transportation of goods, should not be included in the value of taxable services. However, it remanded the issue to the Commissioner to enable the assessee to produce evidence regarding the amounts paid towards octroi charges. The Supreme Court found no reason to interfere with this finding. Final Order: a. Civil Appeal No. 4007 of 2019 (by Revenue) is dismissed. b. Civil Appeal No. 7155 of 2019 (by Assessee) is dismissed, subject to the clarification regarding paragraph no.10.16. c. No order as to costs.
|
