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2013 (8) TMI 784 - CESTAT BANGALOREFranchisee Service - Management, Maintenance and Repair - appellants engaged in marketing and licensing of the software "SAP" - whether service tax was leviable on the activity done by the appellant – appellant contended that they are selling the software but is only granting a license to use the software - not doing any service or process identified when they are passing on the updates to the software - Held that:- it is prima facie clear that payments under the first two relate to licensing of software and for continued support for updates. The third payment does not involve any service to the clients of the appellant to consider it as franchisee service. We are prima facie in agreement with the argument that for the first two services the classification of service received by the appellants from their principals abroad and that rendered by the appellant to clients in India has to be the same because the nature of activities is the same. It is not in dispute that a new entry specifically covering the impugned services from 16/05/2008 came into force when the entry for taxing 'information technology service' was introduced in Finance Act, 1994. The question whether service tax was leviable on this activity done by the appellant prior to the said date under another heading viz., Management, Maintenance and Repair Service, was before the Tribunal earlier and the decision was given in favor of the appellant specifically observing that in view of the new taxable service it has to be considered that the service was not taxable earlier. Now Revenue has come up with their case under yet another old entry for the period prior to the date of introduction of the new entry. This old entry also is not one where the activity was specifically covered. In fact the old entry now proposed appears to be less suited to cover the activity as compared to "Management, Maintenance and Repair". So the principle adopted in the said decision should apply to the present case also. The Appellant is doing consultation and advisory services for business process re-engineering that is required for implementation of software and also customizing of the software to suit the business environment of each client. - It is difficult to agree with the argument of the Revenue that the appellant was receiving franchisee services. - Stay granted.
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