9911796707
TMI Blog2012 (12) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/8/2003 dated 20-06-2003 clarified that only if the output service provided by a service provider is in the nature of the above operations i.e. in relation to operation of computer systems, the exclusion of such output service from “business auxiliary service” would operate and that the mere fact that a personal computer or a laptop has been used for providing the service does not, ipso facto, make the service an “information technology service”. It directed that in such cases, individual service has to be examined with reference to the explanation provided in the definition of business auxiliary service and only such output services which qualify to be IT services in terms of the said explanation shall remain excluded from taxable service under the heading “business auxiliary service”. Com(A) and Tribunal have rightly held that the above activities even though performed by using computer programmes are not in relation to computer systems, that this is supported by the SOFTEX forms submitted by them to STPI wherein they have mentioned that they export “services” only and not “software” and they have declared their exports as “others-Back Office Services”. where a person is prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee got registered under the categories of business auxiliary service and management consultancy service with the jurisdictional service tax authority. 3. On 31-03-2006, it applied for a refund of Rs.8,57,424/- to the Commissioner of Customs and Central Excise, Hyderabad-IV Commissionerate, Hyderabad. It contended that it had received various services in India such as equipment hiring charges, professional consultation service, recruitment service, security service, telephone service, transport service, training service, facility operation service, courier service, cafeteria service and other input services like advertisement service, recruitment service and security service on which it is entitled to input service credit and is entitled to refund of the above amount for the period May 2005 to February 2006 under Rule 5 of the Cenvat Credit Rules, 2004 (as amended by notification No.4/2006-CE(NT) dated 14-03-2006) and Notification No.5/2006-CE (NT) dated 14-03-2006 issued under Rule 5. Subsequently by letter dated 07-12-2006, the assessee restricted their refund claim to Rs.8,47,004/- as some of their input invoices did not contain the requisite information required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g output service and that the input services mentioned above are not used by the assessee in providing the output service and they have no nexus with the output services provided by the assessee and asked the assessee. 5. The assessee submitted a reply dated 01-03-2007 to the above show cause notice contending as follows: (a) With regard to Business Auxiliary Service that they are not engaged in the development of software, which is evident from the export clearance certificate of STPI, Hyderabad wherein the said certificate is granted for the export of software services and not software development; that they have declared their exports as others-back office services ; that the brief note on nature of service provided by them to their customers is submitted along with reply; that CBEC vide it's Circular No.1/2007 dated 03-01-2007 had clarified that the term export of software includes all the activities of manufacture or development of software, data entry and conversion, data processing, data analysis and control data management or call center services; that the permission granted by STPI for computer software is permission to provide services such as data entry and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is not sustainable. He also held that the input services declared by the assessees do not appear to have any nexus with the output services provided by them and therefore the assessees are ineligible to avail input service credit. He therefore rejected the claim of the assessee for refund. 7. Challenging the same, the assessee filed an appeal to the Commissioner of Customs and Central Excise (Appeals), Hyderabad. The appellate authority vide Order in Appeal No.1/2007(H-IV) ST dated 09-04-2007 set aside the order in original dated 12-03-2007. The appellate authority noted that the assessee was providing the services of preparation of Federal Tax Returns, preparation of State, Local Tax Returns, Co-sourcing services, Analyzing Client Data and calculating estimates of tax amount, preparation of the extension requests, preparation of the Consolidated Federal and the State/Local Returns and in filing of returns and from preparing and filing of property tax bills on behalf of their clients. He held that these services clearly fall under the category of Business Auxiliary Services more particularly clauses (iii), (vi) and (vii), that the activities of the assessee are in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and so the assessee is entitled to take credit on the service tax paid on the input services. He also held that the input services availed by the assessee are necessary for providing output services and they satisfy the condition of the input services as given in Rule 2 (L). 9. Challenging the same, the Revenue has filed the present appeal under Section 35-G of the Act. 10. On 09-02-2009, this appeal was admitted to consider the following substantial questions of law: 1. Whether the Hon'ble Tribunal was justified in holding that computerized data processing' did not fall under Information Technology Service? 2. Whether the Hon'ble Tribunal was justified in holding that computerized data processing in the instant case did not fall under Information Technology Service' especially when the Hon'ble Tribunal itself was ambivalent in Para 5.1 of its Order by expressing the view that even if the services rendered by them are taken to mean Information Technology Services' by virtue of the decision of the Apex Court in the case of Tata Consultancy Services ? 3. Whether the Hon'ble Tribunal was justified in holding that the amendment to Rule 5 of the Cenvat C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement with the Andhra Pradesh Central Power Distribution Company Limited was held to be an Information Technology Service and excluded from business auxiliary services at the relevant time and as the assessee herein is doing a similar activity, the said judgment would apply. 13. The counsel for the assessee refuted the above contentions and contended that the orders of Tribunal and the Commissioner (Appeals) do not suffer from any infirmity warranting interference under Section 35-G of the Act, that the classification of a service as information technology service or business auxiliary service is an issue which cannot be gone into in an appeal under Section 35-G of the Act and that in the grounds raised by the Revenue in this appeal the question of lack of nexus between the input services and output services has not been raised by the Revenue and the Revenue cannot be permitted to urge the said issue at the stage of final hearing of this appeal. 14. We have considered the submissions of the respective parties. 15. The nature of services provided by the assessee to M/s. Deloitte Tax LLP, USA under the agreement dated 27-09-2004 have been extracted in the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension requests, preparation of the Consolidated Federal and the State/Local Returns and in filing of returns and from preparing and filing of property tax bills on behalf of their clients by the assessee are activities primarily in relation to computer systems/programming. 18. In our view the Commissioner (Appeals) and the Tribunal have rightly held that the above activities even though performed by using computer programmes are not in relation to computer systems, that this is supported by the SOFTEX forms submitted by them to STPI wherein they have mentioned that they export services only and not software and they have declared their exports as others-Back Office Services . Let us take an illustration where a person is providing a service of analysis of case law/precedents by using software such as Manupatra or SCC online to another. In such a case, the service provider, merely because he is using a computer to provide the said service, cannot be said to be providing information technology service to the service receiver. The contention of the Revenue, if accepted, would require this Court to ignore the words primarily in relation to computer systems/programming in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
