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TMI Blog2010 (9) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... erature supplied to us. - Thus there is almost total convergence between the technical literature on software and the definition of information technology software service given under Section 65(1 05) (zzzze) of the Finance Act, 1994. It is settled law today that a new taxable service covered by specific entry under Section 65 of the Finance Act, 1994 will not attract levy of Service Tax under any pre-existing entry. - In this connection, the Karnataka High Court's judgment in Commissioner Vs. Turbotech Precision Engineering Pvt. Ltd. (2010 -TMI - 77320 - KARNATAKA HIGH COURT) is relevant. The Hon'ble High Court has held that the case of the assessee fell under the definition of 'works contract' and hence it could not be classified as 'consulting engineer's service'. - ST/394/2009 - 1443/2010 - Dated:- 30-9-2010 - CORAM: Mr P G Chacko, Member (judicial), Mr P Karthikeyan, Member (Technical) Appellant Represented by: Shri Prakash Shah and P.B. Harish, Advocates Respondent Represented by: Shri P.R.V. Ramanan, Special Consultant, Per P.G. Chacko (Oral) This appeal filed by the assessee is directed against the Commissioner's order confirming demands of Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding reconditioning or restoration, or servicing of any goods or equipment, excluding motor vehicle; or (b) maintenance or management of immovable property." 'Management' was also brought within the net of Service Tax w.e.f. 01.05.2006 and, consequently, the service came to be known as "management, maintenance or repair" service. There were some amendments to this service also from time to time, but we are not concerned with the same. 3.0 As per Section 65(105)(zzg) of the Finance Act, "taxable service" means any service provided to any person by any person in relation to maintenance or repair, in so far as the period of dispute in this case is concerned. Referring to the above definitions and the changes made thereto from time to time, both sides have advanced their respective viewpoints on the interpretation of the provisions as applicable to "maintenance or repair of computer software". The learned Counsel for the appellant has pointed out that Business Auxiliary Service (BAS for short) was also introduced as a taxable service on 01.07.2003 and, significantly, its definition under Section 65(19) of the Act excluded maintenance of information technology software. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repair of software also as clarified by the Board in its Circular dated 17.12.2003. The learned counsel has opposed this view. According to him, computers or computer systems would not per se include software. According to him, Notification No. 20/2003-ST ibid purported to exempt maintenance or repair of only computer hardware from payment of Service Tax. In this view, according to the counsel, neither of the two Notifications will have any bearing on the taxability of maintenance or repair of software. 3.1 The learned Counsel for the appellant has also relied on the following decisions in support of his plea that what is specifically kept out of the levy by the Legislature cannot be subjected to tax:- (i) Dr. Lal Path Lab Pvt. Ltd. Vs. CCE, Ludhiana - 2006 (4) STR 527(Tri.-Del.) (upheld by the High Court of Punjab Haryana vide [2007 (8) STR 337(P H)] (ii) Federal Bank Ltd. Vs. Commissioner - 2009 (15) STR 279 (Tri.-Bang.) (upheld by the Kerala High Court vide (2010) 34 VST 27 (Ker). 3.2. The learned Counsel has further submitted that maintenance or repair of software became taxable only w.e.f. 16.05.2008 when Information Technology Software service was introduced und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a definite view with regard to levy of Service Tax on computer software maintenance. In this connection, he has referred to show-cause notice No. 2923/2007 dated 13.04.2007 which sought to levy Service Tax under the head "management consultant's service" from the assessee in respect of software licencing, maintenance, consulting and training for the period from 01.04.2004 to 30.09.2004 and March, 2006. This show-cause notice is said to be pending adjudication. The relevant particulars have been provided in a tabulated manner: Category Period of Dispute Demand (INR) SCN No. date Current Status Management Consultant Service (Demand raised on following revenue streams: 1. Software Licensing 2. Software Maintenance 3. Software Consulting 4. Software Training) 1 April 2004 to 30 September 2004 and March 2006 277,806,245 Show-cause Notice No.IV/16/35/2005-ST Gr.III(A)/2923/07 dated 13 April 2007 The Commissioner of Service Tax is yet to adjudicate the show-cause notice. 4.1. The learned Counsel has also pointed out that, in respect of the same activities (software licensing, maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -cause notice. Therefore, according to him, it is not open to the assessee to resist invocation of the extended period of limitation in the present case on the strength of any of the ongoing proceedings arising out of other show-cause notices. 4.3. Shri Ramanan has further referred to the statements of Shri Venkatesh Bhat (Assistant Finance Manager of the appellant company) in this context. Shri Venkatesh Bhat, in his statements, had not referred to any of the show-cause notices issued prior to 26.10.2006 and also had not indicated that the company was not liable to pay Service Tax under the head "maintenance or repair service" in respect of the services rendered by them to various licensees to whom software packages were granted by the company. Shri Venkatesh Bhat also stated that they had estimated the amount of Service Tax payable under the head "maintenance or repair service" for the period from October, 2005. He also stated that the company had started paying Service Tax from October, 2005 and also that they had obtained registration in respect of the said service. In one of his statements, Shri Venkatesh Bhat had also agreed that, with the rescission of Notification No. 20/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities, it is relatively easy to see why it absorbs so much effort. " It would appear from the above literature that, after the release and implementation of software package, under the ERP regime, the appellant used to provide a variety of maintenance services to their licensees. These services used to be provided mostly to upgrade the software or enhance its efficiency so as to meet the requirements of the customer. Obviously, the evolving technological environment would require perfective measures to upgrade the software. As we understand, these measures are covered by the terms "adaptive maintenance" and "perfective maintenance" mentioned in the above literature. "Corrective maintenance" and "preventive maintenance" are two other categories of maintenance of software. It would appear from the literature that, in so far as computer software is concerned, "maintenance" is an expression of wider connotation unlike maintenance of tangible goods (for instance, maintenance of a vehicle), maintenance of a factual situation (for instance, maintenance of status quo ordered by a court) etc. The wider implications of "software maintenance" are easily decipherable from the literature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y software for use in the course, or furtherance, of business or commerce, including- (i) .. (ii) .. (iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software; (iv) providing advice, consultancy and assistance on matters related to information technology software , including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of a new system, specifications to secure a data base, advice on proprietary information technology software ; (v) . (vi) .. (underlinings added). 5.4 The above new taxable service pertains to information technology software. The debate before us was, by and large, in relation to computer software. The Circulars and case-law cited before us were also in the context of discussion on computer software. The new levy w.e.f. 16.05.2008 is in relation to information technology software. The question is whether the computer software and information technology software were treated differently or as same by the legislature. At this juncture, our mind trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n technology software' service and that these very operations have also been specified as different categories on software maintenance in the literature supplied to us. Thus there is almost total convergence between the technical literature on software and the definition of information technology software service given under Section 65(1 05) (zzzze) of the Finance Act, 1994. 5.6 It is settled law today that a new taxable service covered by specific entry under Section 65 of the Finance Act, 1994 will not attract levy of Service Tax under any pre-existing entry. In this connection, the Karnataka High Court's judgment in Commissioner Vs. Turbotech Precision Engineering Pvt. Ltd. (dated 15.04.2010) in CEA No. 4/2007 is relevant. The Hon'ble High Court has held that the case of the assessee fell under the definition of 'works contract' and hence it could not be classified as 'consulting engineer's service'. It may be noted that 'works contract' came to be introduced as a taxable service w.e.f. 01.06.2007 only. The service rendered by the above company was for a period prior to the said date. The Revenue wanted to levy Service Tax under the pre-existent head "consulting engineer ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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