Applicability of Service tax on Computerized Data Processing Activity - Exclusion of Information Technology Service from the scope of Business Auxiliary Service

In the present case, decided by the CESTAT (reported in 2008 -TMI - 3607 - CESTAT BANGALORE), the appellant was engaged in computerized data processing activity.  From the he definition of the "Business Auxiliary Service" during the relevant period "Information Technology Service" has been excluded from the scope of "Business Auxiliary Service".

The department argued that the appellants were actually using the computer to render various services which include maintenance of accounts etc. He argued that one cannot say that any body using a computer is rendering Information Technology Service.

In this matter CESTAT decided that, "I find that the appellants are required to generate various MIS reports given in Para 6 of the contract and to develop the software for this purposes. Therefore, it would not be correct to state that they had not carried out Data Processing task. The services clearly fall under the scope of Information Technology Services and thereby they are excluded from the scope of Business Auxiliary Service."

Accordingly the demand was set aside. 

(For full text of judgment - visit in 2008 -TMI - 3607 - CESTAT BANGALORE)