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TMI Blog2008 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. S/ Shri T.C. Raja Das and K. Sambi Reddi, the Learned Departmental Representatives represented the Revenue. 3. We heard both sides. 4. The issue involved is whether the services rendered by the appellant are entitled for the benefit of the Service Tax Notification No. 20/2003, dated 21-8-2003. The appellants entered into a contract with the Reserve Bank of India for comprehensive maintenance of hardware and software of the MICR Cheque Processing Solution with Imaging facilities. During the relevant period, which is actually from 1-8-2003 to 31-7-2004, the appellants did not pay the Service Tax and they claimed exemption under the above mentioned Notification No. 20/2003, dated 21-8-2003. The said Notification is reproduced below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular is reproduced below :- The Board has received representations seeking clarification with regard to leviability of Service Tax in respect of maintenance repair of ATMs in terms of Notification No. 20/2003-S.T., dated 21-8-2003. 2. The matter has been examined in the Board. It is clarified that computers are essentially data processing machines and their function is to process analog or digital data. There may be machines, which use such processed data to perform certain specified functions. These machines may involve processing of data but their principal function is not processing of data per se, but using such processed data for performing independent functions. These are not 'computers' but are computerised machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8472.90 and its parts under 8473.40. This decision and also has been relied on in the show cause notice to show that the MICR Cheque Processing Solution is not a computer system and it is something like an ATM Machine for which Board has given clarification. On these two grounds, the lower authority has come to the conclusion that the appellants are not entitled for the benefit of the exemption Notification. It appears that he has not gone through all the submissions made by the appellant with regard to the system for which the appellant had undertaken the Annual Maintenance Contract. In order to appreciate the factual situation, two hearings were given. The second hearing was held on April 24, 2008 during which the appellants gave very de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessor containing controller, reader and stackers (9) Additional PC servers (10) Networking equipments which are routers (11) (12) Computer Desktops (13) Computer printers 4.5 At this point, we can reproduce the relevant portions of the Agreement entered by the appellant with the Reserve Bank of India. In terms of the Agreement, the appellant is required to undertake the maintenance of the hardware and software for the MICR Cheque Processing Solution with imaging facilities at the national clearing cell RBI at the four locations of Mumbai, Delhi, Kolkata and Chennai. Article 9 of the Agreement is reproduced below :- This Agreement shall come into force with effect from February 1, 2001 in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the MICR code is read. The information read by the input device is sent to the computer server for the purpose of processing. The computer server processes the information and sends the processed information to the output device, i.e., the sorter. Based on the instructions from the computer server, the output device (i.e. the sorter) shall move the cheques into the output device holding the cheques (i.e., the stackers). It has been stated that various other functions are performed by the other servers (like back up servers, RTGS server, additional servers) and various other peripheral devices in the entire system. Therefore, on going through the working of the system, it is seen that it is not something like an ATM machine. The stacker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, in the Agreement itself, the total cost of maintaining the entire system is given. They have given the maintenance cost in respect of the stacker module also. When we go through those figures, the stacker modules themselves, their maintenance charges are only 8% of the total cost. These figures are as follows :- While the consideration towards maintenance of stackers is ₹ 44,27,034/-, the consideration towards maintenance of the main frame systems and other peripherals is ₹ 3,92,45,530/-. But, the Learned Adjudicating Authority has demanded Service Tax on the entire amount. If at all the Learned Adjudicating Authority had decided that the stacker is not a part of the computer system, relying on the Board's clar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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