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TMI Blog2014 (11) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... Service' and also proposing to deny CENVAT credit wrongly availed. The details of amounts demanded in both the show-cause notices put together are summarized as under: The first show-cause notice covering the period from April 2006 to March 2008 was issued on 06.04.2009. The second show-cause notice covering the period from April 2008 to March 2008 was issued on 23.10.2010. Category of taxable service Show-cause Notice-I Show-cause Notice-II Franchise Service Rs. 95,73,35,088/- Rs. 4,94,43,350/- Business Auxiliary Service Rs. 48,79,55,249/- Rs. 5,13,29,077/- Management Consultancy Service Rs. 1,01,08,922/- Maintenance or Repair Service Rs. 2,63,07,049/- CENVAT Credit on STPI invoices Rs. 37,87,170/- Rs. 47,48,695/- 2. The first major demand is under the category of Franchise Service. The demand has been made under reverse charge provisions in Finance Act 1994 on the amounts paid by the appellants to Oracle during the period from April 2006 to 15.05.2008. 2.1. Before we proceed it would be appropriate to reproduce the definition of 'Franchise Service'. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der ITSS and therefore prior to 16.05.2008 it could not have been classified under ITSS. 6. On the other hand the learned AR on behalf of the appellants submitted that SDDLA shows that appellant has acknowledged that the Oracle has incurred substantial costs for the development of diverse software products which enjoy substantial commercial value and success worldwide. The agreement provides for duplication of the software, distribution, sublicensing, promotion and marketing the software covered by the agreement. The agreement also permits the appellant to use trade mark, trade names and logo belonging to Oracle. The agreement provides for 56% of sale proceeds to be paid to Oracle. The appellant will be responsible for entire sales activity in India. Clause 9.4 of the agreement enjoins the appellant to notify each sub-distributor and sub-licensee of the limitations of the copyright licensed products as indicated by the licensor. The learned AR also relied upon end-user licence agreement downloaded from the Oracle, USA to show that end-user entering into contract with Oracle and Oracle takes the responsibility to indemnify the end-user against third party claims of infringements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized to access the same would show that the appellants have a representational right. After selling the licence for using the software, Oracle continues to support the appellant by making access to their site available to the licensees/sub-licensees of the appellant. This shows that appellant is in fact representing Oracle. This also shows that the end-user or the person who has obtained the licence to use the software clearly knows that the process or product is identified with Oracle since all documentations, updations etc. are available in oracle site and the sub-licensee can use the same. No submission was made or no evidence was put up before us that the website is of Oracle India and not of Oracle. Further the definition also covers cases where a franchisee is granted right to manufacture goods. It was contended that the appellants have no such right. The permission to duplicate the software and distribution is nothing but an activity which is equivalent to the manufacture in our opinion. Software duplication results in a product which serves the same purposes as the original. 8. Nevertheless the fact remains that whether an activity is a franchisee or a mere licensee ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llation and implementation, design, development and customization of software, data migration and conversion, product support, workshop, technical assistance on IT architecture etc. 11. The case of the department is that above activities of the appellant is classifiable under sub-clause (iii) of Section 65 (19) which contains the definition of 'Business Auxiliary Service' and covers any customer care service provided on behalf of the client. The case of the department is that appellant and Oracle are separate legal entities; appellants are providing services on behalf of Oracle USA though the product and technical support and consulting service may be classified under ITSS after 16.05.2008 it is classified under Business Auxiliary Service for the prior period. 12. It was submitted on behalf of the appellants that appellants are not providing any services on behalf of Oracle. Appellants have paid VAT on consideration received towards product/software updates as it amounts to sale of software and after 16.05.2008 they have been paying the tax. It was also submitted that there is a computation error since the department relied upon draft financial statement and not on the audited fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gards Training Service and Manpower Supply Service, it was submitted that the appellants have paid the tax along with interest. 15. The next demand is under the category of Maintenance and Repair of Software. The stand of the Revenue is as under: Notification No. 20/2003-ST dated 21.08.2003 exempted taxable service in respect of maintenance or repair of computer, computer systems or computer peripherals. The above exemption was rescinded vide Notification No. 7/2004-ST dated 09.07.2004. Board Circular No. 256/1/2006-CX.4 dated 07.03.2006 clarifies that maintenance or repair of computer software is taxable w.e.f. 09.07.2004. The appellants are therefore liable to pay service tax w.e.f. 09.07.2004. 16. On behalf of the appellant the following submissions were made: Maintenance of software is not covered under Maintenance or Repair service during the period. & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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