The appellant, a large account reseller authorized by Microsoft, ...

Remanded Dispute Over Service Tax on Software Reselling Arrangement.

Case Laws     Service Tax

September 6, 2024

The appellant, a large account reseller authorized by Microsoft, received IT services from Microsoft for which payments were made. The department alleged that Microsoft sold the software to the appellant, raising a service tax demand under the reverse charge mechanism. However, the agreement between Microsoft and the appellant does not indicate transfer of title, ownership, or right to use the software to the appellant. The appellant facilitates procurement, invoicing, and payment collection, but no consideration is paid for sale or right to use. Microsoft's invoices are issued to customers, not the appellant. The document relied upon by the department is for FEMA compliance and does not establish transfer of right to use IT services to the appellant. The adjudicating authority failed to consider the appellant's pleas and relied on Microsoft's licensing guide without examining whether the licenses were used by the appellant. Issues like service tax adjustment, credit availed, etc., require fresh consideration by the adjudicating authority based on the findings. The matter is remanded for de novo consideration by the adjudicating authority.

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