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TMI Blog2011 (2) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The impugned circular is declared to have no application to the petitioner, as the same is opposed to the provisions of the Finance Act insofar as it relates to imposing of service tax on software relating to maintenance, repairing and servicing under the Finance Act, 1994 before the period of Finance Act, 2006. - WP No. 5534 of 2006 / WPMP No. 5976 of - - - Dated:- 24-2-2011 - P Jyothimani, J Appellant Represented by: Mr. P Aravind Datar, Sr.Counsel for Mr. Muizz Ali Respondent Represented by: Mr. S Yashwanth JUDGEMENT The writ petition is for declaration to declare the Circular dated 7.10.2005 issued by the second respondent, the Central Board of Excise and Customs as ultra vires section 83 of Finance Act, 1994 read with sections 37B and 65(19) of the Central Excise Act, 1944 and is in violation of Articles 14, 19(1)(g) and 265 of the Constitution of India insofar it relates to the petitioner. 2. The petitioner which is engaged in the business of publishing newspapers and periodicals had entered into a contract on 31.10.2000 with CCI Europe A/S Denmark for the supply of software for pagination system. That apart, an agreement for maintenance of soft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other services primarily in relation to operation of computer systems are excluded and therefore, it does not mean that it is not taxable under maintenance or repair service. Therefore, according to the respondents, the maintenance branch of information technology was brought into the purview of service tax structure by the amendment made to section 65(19) by Explanation (b) in Finance Act, 2004. (a) After the amendment, in respect of import of service, section 66A(1) provides that any service specified in section 65(105) is taxable service provided that the person has established a business or has a fixed establishment from which the service is provided or has his permanent address or usual place of residence in a country other than in India and that the same is received by a person who has his place of business or usual place of residence in India. (b) To attract service tax, the contracted agreement need not necessarily be maintenance contract or agreement. By the circular it is only the scope of explanation to the amendment to the Finance Act which has been indicated and that is well within the statutory powers and therefore, the contention of the petitioner that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier in the Finance Act, 2003 in which the terms, 'business auxiliary service' and 'maintenance or service' were introduced for the first time. There was specific exclusion of information technology service including maintenance of computer software from the purview of business auxiliary service. The term, 'business auxiliary service' as introduced in the Finance Act, 2003 with explanation contained therein is as follows: 65 (19) business auxiliary service means any service in relation to,- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services, and includes services as a commission agent, but does not include any information technology service. Explanation.-- For the removal of doubts, it is hereby declared that for the purposes of this clause information technolo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse those packages to others. The canned software programs were programs like Oracle, Lotus, Master Key, N-Export, Unigraphics, etc. The question raised in this appeal was whether the canned software sold by the appellants could be termed as goods and as such was assessable to sales tax under the Andhra Pradesh General Sales Tax Act,1957. and ultimately answered as follows: There is no error in the High Court holding that branded software is goods. In cases of both branded and unbranded software the software is capable of being abstracted, consumed and use. In both cases the software can be transmitted, transferred, delivered, stored, possessed, etc. Thus even unbranded software, when it is marketed/sold, may be goods. However, this aspect is not being dealt with here and no opinion is expressed thereon because in case of unbranded software other questions like situs of contract of sale and/or whether the contract is a service contract may arise. 9. While deciding the same, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular manner; or (b) so as to interfere with the discretion of the [Commissioner of Central Excise (Appeals)] in the exercise of his appellate functions. 16. The scope of such power came to be decided by this Court in Lakshmi Machine Work Ltd., vs. Union of India [(1992) 57 ELT 211 (Mad)] to the effect that the Circular cannot interfere with the powers of the quasi-judicial authority in applying the statutory provisions. J.Kanakaraj,J. (as He then was) observed in this regard as follows: 19. The last point which has to be decided is whether the first and third respondents have jurisdiction to issue such circulars which bind the quasi-judicial authorities without leaving any room for exercising their quasi-judicial powers. The respondents can take umbrage, only under Section 37(B) of the Act. Sri K.Parasaran argues that Section 37(B) should be to the classification of excisable goods or with reference to levy of duties of excise on such goods. In other words, it is argued that the words all such goods are relatable only to the classification of excisable goods. If the argument of the revenue with regard to the scope of Section 37(B) is accepted, it will only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a different commodity based on a circular issued by the Board in order to sustain the impugned notification and found on fact as follows: 22. We find no merit in the above contentions. At the outset, it may be stated that in the case of field latex there is 60% water and 40% is the rubber content. On the other hand, centrifuged latex produced from field latex reverses the ratio whereby the rubber content is increased to 60% and the water content is reduced to 40%. Basically, field latex is raw rubber whereas centrifuged latex is a product. This is the rationale behind giving or setting-off/deduction under Notification dated 13-11-2007. 20. Again, the judgment relied upon by the learned counsel for the respondents in Union of India vs. Azadi Bacho Andolan (2004) 10 SCC 1] was in the context of the circular issued in violation of section 119 of the Income-tax Act relating to the residence nature of a Company which was sought to be assessed and it was held that the powers of Central Board of Direct Taxes in issuing directions in the form of circular under section 119 of the Income-tax Act to set things on course by eliminating avoidable wastage of time, talent and energ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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