Service Tax Demand Set Aside: Software Royalty Payments Not Taxable as Business Consultancy Services Under Reverse Charge Mechanism

CESTAT set aside the service tax demand against the appellant, finding that transactions with UCT constituted sales rather than Business Auxiliary Services and were not taxable under the Reverse Charge Mechanism. The Tribunal determined that using third-party software with royalty payments did not constitute importation of Management or Business Consultancy Services. Additionally, the adjudication order was invalidated for being issued beyond the statutory time limit without justification for the delay, following precedents established in Kopertek Metals and IDFC First Bank Ltd. The CESTAT emphasized that when the adjudicating authority fails to provide reasons why an order could not be passed within the mandatory timeframe specified in Section 73(4B) of the Finance Act 1994, such delay is fatal to the order's legality. Appeal allowed. .....

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