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TMI Blog2013 (2) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Service tax paid towards telephone and medical insurance of employees – In Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT ] it has been held that the assessee is entitled for input service credit of the services, which are availed in course of their business and manufacturing activity. Since appellant had utilized both the disputed services in relation to their business activity and in the course of their business activity - Appellant is entitled to the credit of input service availed by them on the Service tax paid towards telephone and medical insurance of the employees – In favour of assessee. Further appellants genuinely believed that software maintenance did not attract Service tax during the period from 9-7-2004 to 30-8-2005. - started paying Service tax w.e.f. 1-9-2005 even when the maintenance of software was not taxable - Therefore no suppression of facts with an intention to evade payment of Service tax - Entire demand for the maintenance of software and for wrong availment of ineligible credit is not sustainable as the ingredients to invoke the extended period under Section 73(1) of the Finance Act are absent in the instant case – set aside the order – ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled on such services as they do not fall under the category of an 'input service' under Rule 2(1) of Cenvat Credit Rules, 2004. Accordingly, the total amount of ineligible Cenvat credit worked out to Rs. 17,654/-. 2.4 Hence, a Show Cause Notice proposing to demand an amount of Rs. 20,82,070/- (for the period 9-7-2004 to 30-8-2005) towards Service tax, Ed. Cess, and Rs. 41,045/- (for the period from April 2007 to June 2007) towards Service tax, Ed. Cess and High. Ed. Cess under proviso to Section 73(1) of the Finance Act, 1994 and also ineligible Cenvat credit of Rs. 17,654/- under proviso to Section 73(1) of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 along with appropriate interest (for the above mentioned demand & ineligible Cenvat credit) under Section 75 of the Finance Act, 1994 besides proposing to impose penalties under Sections 76 and 78 of the Finance Act, 1994 and proposal to appropriate an amount of Rs. 19,278/- and Rs. 2,668/- already paid towards Service tax, Ed. Cess and High. Ed. Cess and interest respectively was issued to the appellant. 2.5 After due process of law, the Lower Adjudicating Authority confirmed the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of Rs. 1,969/- on such advances much before issuance of SCN and intimated the same to the Department. (vi) that regarding the alleged ineligible credit of Rs. 17,654/- the same relates to telephone and mediclaim policies and the credit thereof worked out to Rs. 15,978/- and not Rs. 17,654/-. Though these are eligible credit, on being pointed out by audit, the appellant quantified and reversed the credit of Rs. 15,978/- and also paid interest of Rs. 699. (vii) that the impugned order relates to the period 9-7-2004 to 30-8-2005 and the SCN in the present case has been issued on 1-1-2009. The appellant submitted that they have not suppressed any information from the Department. The appellant was engaged in the Development, implementation and maintenance of SAP/ERP software which includes customization also. These softwares were implemented and maintained for the specific requirements of the customers. The appellant further submitted that for the period after 1-5-2006, maintenance of computer software was removed from the explanation providing exclusion under Business Auxiliary Services, for avoiding disputes the appellant began collecting and remitting Service tax on maintenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Department's main contention is that the appellant is liable to pay Service tax on the maintenance charges collected from their clients towards maintenance of software developed by the appellant w.e.f. 9-7-2004. I find from the records that the appellants are paying Service tax w.e.f. 1-9-2005 on the charges for maintenance or repair of software collected by them from their clients. 5.2 The Service tax on maintenance or repair service was introduced w.e.f. 1-7-2003. The circulars and notifications issued during the disputed period with regard to the taxability of software under maintenance or repair service are mentioned below : I. Notification No. 20/2003-S.T., dated 21-8-2003 exempted the taxable service provided to a customer by any person in relation to maintenance or repair of computers, computer systems or computer peripherals from the Service tax leviable thereon under Section 66 of the said Act. II. Circular No. 70/19/2003-S.T., dated 17-12-2003 issued vide F. No. 256/9/2003-CX. 4 : Board vide this circular while clarifying the issue whether annual maintenance contracts for maintenance of software is exempt from Service tax, had mentioned that as such compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e. the day Notification No. 20/2003-S.T. was rescinded. Therefore, all efforts should be made to collect the Service tax not paid by such service providers". 5.3 The consultant, who appeared on behalf of the appellant, for Personal Hearing on 8-6-2011, has brought to my notice of the decision of Hon'ble Madras High Court's decision in the case of M/s. Kasturi & Sons Ltd. v. UOI - 2011 (22) S.T.R. 129 (Mad.), Tribunal Mumbai's decision in the case of EBZ Online Private Limited v. CCE, Pune - 2011 (22) S.T.R. 185 (Tri.-Mumbai) and Tribunal Bangalore's decision in the case of SAP India Pvt. Ltd. v. CCE, Bangalore-III - 2011 (21) S.T.R. 303 (Tri.-Bang.). The consultant, relying on the above decisions, submitted that in all decisions, the ratio of Hon'ble Apex Court's decision in the case of Tata Consultancy Services v. State of Andhra Pradesh, held to be not applicable to the facts of the case. He has further submitted that Hon'ble Madras High Court in the above referred case had quashed the C.B.E. & C's Circular dated 7-10-2005, based on which the present demand was raised, and hence his client is not liable to pay Service tax prior to 1-6-2007. The underlying principle of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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