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TMI Blog2022 (2) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of Tata Consultancy Services that computer software was goods, the department vide Circular No.81 dated 7.10.2005 and Circular No.256 dated 7.3.2006 clarified that maintenance, repair and servicing of software were liable to service tax from 9.7.2004; the appellants who are engaged in providing maintenance and repair of software and in export of services started paying service tax from 1.12.2005 only. Therefore, department opined that the appellants are liable to pay service tax of Rs. 644.69 lakhs with effect from 9.7.2004. During the course of audit, it was also observed that prior to 1.7.2008, a service provider of both exempted and taxable services was allowed the option either to maintain separate accounts of inputs services received under Rule 6(3)(c) of CENVAT Credit Rules, and in case such separate accounts are not maintained, they shall be entitled to utilise the CENVAT credit only to the extent of 20% of the service tax payable; the appellants though availed and utilised credit up to 20% of the tax payable, failed to pay the balance amount of 80% of total tax i.e. Rs. 135.16 lakhs in cash for the period June 2007 to March 2008. A show-cause notice dated 19.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar Ltd. vs. CCE, Thane: 2019 (6) TMI 903-CESTAT-MUMBAI and DHL Logistics Pvt. Ltd. vs. CCE, Thane-II: 2015 (38) STR 621 (Tri.-Mum.). 2.3 Learned counsel for the appellant submits also that the demand is time barred as there was no wilful suppression or mis-statement of fact with an intent to evade payment of duty; the appellant was under bona fide belief that maintenance of software services was not liable to service tax and therefore, did not indicate the same in the returns; moreover, the issue is revenue neutral and mere non-payment of service tax cannot be equate to duty evasion. He relies upon: * Chemphar Drugs and Liniments: 1980 (40) ELT 276 * Nirlon Ltd. vs. CCE, Mumbai: 2015 (320) ELT 22 (SC) * Bharat Hotels Ltd. vs. CCE: 2018 (2) TMI 23 - Delhi High Court * Uniworth Textiles Ltd. vs. CCE, Raipur: 2013 (288) ELT 161 (SC) 3. Learned AR for the department reiterates the findings of Order-in-Original and Order-in-Appeal and submits that in terms of Rule 6(3), the appellants are required to pay balance 80% of tax by way of cash only. 4. Heard both sides and perused the records of the case. As regards the first issue of demand on 'software maintenance services', we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the second respondent can have the effect of imposing the liability of service tax or otherwise and whether the circular issued by the second respondent can be read in supercession of the statutory provisions of the Finance Acts in the respective financial years. 8. Therefore, on fact, it is clear that till the advent of the Finance Act, 2007, the information technology which included maintenance of computer software, had been outside the purview of 'business auxiliary service', especially under Section 65 and the term, 'goods' in the Finance Act, 2007 has included 'computer software' under section 65(105)(zzg). However, under the impugned circular the second respondent placed reliance on the judgment of the Supreme Court in Tata Consultancy Service v. State of Andhra Pradesh [(2005) 1 SCC 308] to conclude that software being goods, any service relating to maintenance, repairing and servicing of the same is also liable for service tax. The Supreme Court in that case decided about the term, 'goods' in the light of Andhra Pradesh General Sales Tax Act and framed the question as follows : "The appellants provided consultancy services including computer consultancy se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilised later. We find that CESTAT has gone into the issue in the case of Idea Cellular : 2019(6) TMI 903 (CESTAT-MUM.). "5.1. A plain reading of the above provisions indicate that while Rule 6(1) provides that the manufacturer or provider of output service is not entitled for the credit of such quantity of input or input services which are used in the manufacture of exempted goods or exempted service except in the circumstances mentioned in the sub-rule (2) of the said Rules. Sub-rule (2) of Rule 6 provides for maintenance of separate records in respect of inputs, input services substantiating use of input and input services for taxable and exempted goods or services. Sub-rule (3) of Rule 6 provides that in case separate accounts are not maintained, the manufacturer or provider of services shall follow either of the conditions stipulated in sub-rule (3) of Rule 6. It is pertinent to note that after the amendment the only change that could be seen in respect of sub-rule (3) is to the extent of payment in respect of exempted goods produced or exempted services provided. While there is a cap on the utilisation of credit attributable to exempted goods or services, there is no cap wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that the Circular is not in existence and not available on the website http://www.cbic.gov.in; the said purported circular was taken from a private website and is not admissible unless it is established to be correct; he submits a list of all circulars issued by CBIC taken from the website of CBIC; circulars are serially numbered and the list of circulars does not reflect the said circular having been issued by CBIC. Learned counsel for the appellants submits that the circular has been taken from the website of www.taxmanagementindia.com and was Appeal No. ST/86814/2013 MUM 20 signed by Shri Gowtham Bhattacharya, Commissioner of Service Tax; Madurai Commissionerate has issued Trade Notice No.14/2009 dated 13.3.2009, Service Tax No.6/2009; the said circular was followed by the Tribunal in various decisions. We find that as per our discussion above, there is no provision in the Rules for the credit availed to lapse once the conditions therein have been fulfilled. Therefore, we find that despite the circular the issue is clear. We find that this Bench in the case of DHL Logistics Pvt. Ltd. (supra) has held that: "5.1 As regards the denial of Cenvat credit to the extent of 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above clarification given by the Board, recovery of the Cenvat credit wrongly taken cannot be sustained. What can be demanded is only interest on the wrongly availed credit from the date of utilisation of credit till 1-4-2008 when the assessee became entitled for the credit. Therefore, the adjudicating authority has to re-examine the matter in the light of the C.B.E. & C. circular dated 21-11-2008. It is seen from the above that Tribunal has concluded the issue independently and sought to reinforce the decision on the basis of the purported circular. Therefore, we find that the existence or otherwise of the circular is inconsequential. However, it is not clear as to why Madurai Commissionerate has issued such a Trade Notice based on the Circular and as to whether the same was withdrawn subsequently. However, as we find that the appellants claim to the unutilised credit is correct on merits, we do not find any reason to go into the circular." 4.4 In view of the above, we hold that the appellants are entitled to utilise the balance 80% of the credit availed before 1.4.2008 after 1.4.2008. Having come to this conclusion, the appellant's action in paying service tax which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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