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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 ..... ut considering these aspects also in our opinion if we consider the statute and the agreements, at this stage it would be sufficient and the conclusion is that appellants do not have a strong prima facie case. Business Auxiliary service - 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. Information Technology Services were excluded from the scope of Business Auxiliary Service right from the date of introduction of Business Auxiliary Service as taxable on 01.07.2003. This exclusion lasted till 16.05.2008 when the new taxable service ITSS was introduced. It was also submitted that the scope of Information Technology Service excluded from the levy of service tax under Business Auxiliary Service was very wide and covered all services relating to design or development of computer software, computerized data processing or system networking or any other service preliminarily in relation to operation of computer system. Prima facie we find force in this argument. Therefore in respect of this service, we co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08, the first show-cause notice was issued demanding service tax under various categories and also denying CENVAT credit in respect of service invoices addressed to 21 STPI units in Bangalore and Hyderabad. The second show-cause notice was also issued covering the subsequent period demanding service tax on Franchise Service and Business Auxiliary 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 ₹ 95,73,35,088/- Rs. 4,94,43,350/- Business Auxiliary Service ₹ 48,79,55,249/- Rs. 5,13,29,077/- Management Consultancy Service Rs. 1,01,08,922/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensing the products of Oracle in India. The agreement is on principal to principal basis. The transaction is in relation to licensing and not of franchise. The appellants do not have any representational right. The appellant do not represent to the customers parties that the software has been developed by them. Licence to use software is considered as copyright in software and transactions involving licensing of copyright were excluded from the ambit of IPR service. The appellants have been paying tax after 16.05.2008 classifying the service under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogram documentation can be accessed online at oracle.com site. This agreement used the word you and your refer to the individual or entity that has entered into the agreement with appellant. Such end-users can access oracle.com for the purpose of obtaining documentation details, services, upgradation etc. This particular agreement which is required to be entered into by the appellant and the fact that the persons who have obtained the software from the appellant have to access the oracle site for various purposes and are authorized 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormal period is ₹ 34,87,23,385/-. 10. The next demand is under the category of Business Auxiliary Service. The appellants sublicensed the product of Oracle USA to customers/clients in India. They provide advice, consultancy, customization, installation, training and technical support/assistance for usage and administration of software. The appellants provide software updates to customer in India for a separate consideration. Appellants also provide advice/consultancy in relation to computer software, installation 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST, Bangalore LTU Final Order No. 20218/2014 dated 11.02.2014. It was also submitted that such services even though they are liable would be covered under Business Auxiliary Service or Business Support Service. It was also submitted that computation of demand is erroneous. Further submission was also made that no reason has been given to justify classification of the services under this heading. We find that these submissions would result in conclusion that appellants have made out a prima facie case in their favour. 14. As regards 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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