Commissioner Of Service Tax vs Valia Consultancy

Customs Excise and Service Tax Appellate Tribunal22 January 2015

CitationAppeal No. Applicant/

Ratio decidendi

The rule this decision rests on

The services rendered by the assessee in the period 2001 to 2004 are to be classified by reference to the nature of the services actually rendered as shown in the invoices, namely software and system development; where such services are in respect of computer software, service tax liability arises only from the date on which that category was brought into the tax net, and so no tax for the period in question is leviable on them. Where the assessee's services are classified under the Consulting Engineers service category and are exempt from service tax during the period in question, the demand of service tax for that period cannot be sustained, and the Revenue's appeal against non-imposition of interest and penalty must fail accordingly.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II

Sl. No. Application No. Appeal No. Applicant/ Appellant Respondent 1. -

ST/17/10 Commissioner of Service Tax Valia Consultancy

ST/22/10 Valia Consultancy CST Mumbai

3. Cross Objection ST/CO/5/10

Valia Consultancy CST Mumbai

Arising out of Order-in-Appeal No. PK/96/2008 dated 30.06.2008 passed by the Commissioner of Central Excise (Appeals), Mumbai I.

For approval and signature:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Appearance

Shri A.B. Kulgod Asst. Commissioner (A.R.) for Revenue Shri Jayesh Valia, Partner For assessee

CORAM:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

Date of Hearing : 22.01.2015 Date of Decision : 22.01.2015

ORDER NO.

Per : M.V. Ravindran These two appeals are directed against Order-in-Appeal No. PK/96/2008 dated 30.06.2008. Appellant/assessee is in appeal against the impugned order for confirming the demand of service tax liability. Revenue is in appeal for non-imposition of interest and penalty on the appellant/ assessee. Appellant/assessee has also filed a Cross Objection against the appeal filed by the Revenue.

2. Heard both sides and perused the records.

3. On perusal of the records we find that the period involved in this case is 2001 to 2004. It transpires from the records that the appellant/assessee during the relevant period had received some payment from Financial Technology India Pvt. Ltd, Netfinex. Com India Ltd. and Multi Commodity Exchange of India for rendering services to them and though accounted in the balance sheet, did not discharge the service tax liability. This allegation was taken in the show-cause notice dated 16.02.2005. The appellant/assessee took a stand before the adjudicating authority as well as the first appellate authority that the services rendered by them are towards the development of software and system analysis for internet based trading services. These services are not covered under the Management Consultancy Services and benefit of exemption was available. Both the lower authorities did not agree with the contentions of the appellant/assessee. We called for the records and checked the invoices under which the appellant/assessee had billed the service recipient i.e. Financial Technology India Pvt. Ltd, Netfinex. Com India Ltd. and Multi Commodity Exchange of India. The invoices clearly indicate that the said consultation services are provided towards software and system development charges. It is on record as noted by the first appellate authority that the service of Design and Development of Computer Software rendered by the appellant/assessee are covered under Information & Technology Services would fall under Section 65 (105)(zzze) and came into tax net in 2008. In our considered view, if the services rendered by the appellant/assessee are in respect of computer software then the tax liability may arise on them only from 2008. In our view the appellant/assessee has made out a strong case in their favour

4. In view of the foregoing, we hold that the services rendered by the appellant/assessee during the period in question will fall under the Consulting Engineers Services with exemption from the payment of service tax liability. The appeal filed by the appellant/assessee is allowed with consequential relief, if any. Appeal filed by the Revenue is rejected as we have held in favour of the appellant/assessee.

5. Cross Objection filed by appellant/assessee is also stands disposed of (Dictated in open Court)

(P.R. Chandrasekharan) Member (Technical)

(M.V. Ravindran) Member (Judicial) nsk

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