9911796707
TMI Blog2013 (8) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... t to consider it as franchisee service. We are prima facie in agreement with the argument that for the first two services the classification of service received by the appellants from their principals abroad and that rendered by the appellant to clients in India has to be the same because the nature of activities is the same. It is not in dispute that a new entry specifically covering the impugned services from 16/05/2008 came into force when the entry for taxing 'information technology service' was introduced in Finance Act, 1994. The question whether service tax was leviable on this activity done by the appellant prior to the said date under another heading viz., Management, Maintenance and Repair Service, was before the Tribunal earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce' in the impugned order and the demand is for the period April 2006 to March 2008 and is quantified as Rs.79,07,67,027/-. Apart from this demand, there is interest and also penalties imposed by the impugned order. 2. The appellants are engaged in marketing and licensing of the popular software known as "my SAP" along with other related software products of M/s. SAP Aktiengeselischaft Systems, Germany. They do software licensing, maintenance, consulting and training services. There is an agreement between the appellant and SAP AG, Germany. Subject to the terms of the agreement, SAP AG granted to the appellant a non-exclusive license to use, market, sub-license the software, documentation, 3 rd party data base and 3 rd party software to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts out that the classification of the service received by the appellant has to be same as the classification of the service rendered by them because the nature of the activities are the same in the hands of both. He points out that the Department had earlier issued demands under the category of "Management Consultant Service". The adjudication order in the matter was set aside by Tribunal by Final Order No. 261/2007 dated 23-02-07. Later demands proposing classification of the service under Maintenance and Repair Service was issued and the demand was finally dropped by the Tribunal in order reported at. Para 4.1 of the order is records orders set aside for period prior to the said order. Now for a later period, Revenue has come up with prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not selling the software but is only granting a license to use the software. Further they are not doing any service or process identified with the SAP, Germany when they are passing on the updates to the software as developed by SAP, Germany. A franchisee, sells or manufactures goods representing himself to be of the same capacity as the franchisor. While licensing the software they do not represent themselves to be SAP Germany. They act only as their agents. In the case of service also, the franchisee actually provides the service of the same quality as is provided by the franchisor and the franchisor controls the quality of the services through their own control mechanisms. In the case of sale of a product manufactured by one person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. The Counsel Appellant submits that these payments can in no way be considered as charges for franchise. 4. Opposing the prayer of the appellants, the authorized representative for the Revenue submits that the appellants are representing SAP, Germany in India. They are marketing the software in India and realizing the consideration from the clients. Out of this consideration realized, a part thereof is remitted to SAP, Germany as Royalty. This payment is towards the representational right granted by the SAP, Germany to sell the software in India and for doing the process of customization of the software for each customer. The entire activity of implementation of SAP software is a process identified in India with SAP, Germany and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 came into force when the entry for taxing 'information technology service' was introduced in Finance Act, 1994. The question whether service tax was leviable on this activity done by the appellant prior to the said date under another heading viz., Management, Maintenance and Repair Service, was before the Tribunal earlier and the decision was given in favor of the appellant specifically observing that in view of the new taxable service it has to be considered that the service was not taxable earlier. Now Revenue has come up with their case under yet another old entry for the period prior to the date of introduction of the new entry. This old entry also is not one where the activity was specifically covered. In fact the old entry now propo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
