TMI Blog2021 (9) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... g expenses, meal expenses, salary to staff attending the foreign personnel etc. There is no evidence for payment of remuneration to the foreign personnel in foreign currency by the appellant. Even though the appellant might have expended huge amounts for the said foreign personnel, unless there is evidence that these amounts are paid to foreign personnel for providing management consultancy service, the demand is incorrect - There is also no evidence to prove that they have received management consultancy service or paid fees for such services so as to be liable to pay service tax under reverse charge mechanism. On this ground, the demand under Management Consultancy Service cannot sustain. Extended period of limitation - HELD THAT:- On perusal of the letter issued by department, it is seen that after verification of accounts certain objections have been raised inter alia demanding service tax under the above categories. There is no positive act of suppression of facts or willful mis-statement brought out by the department so as to invoke the extended period. Further, the appellant is called upon to pay the service tax under reverse charge mechanism for the services. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax under reverse charge mechanism under Management Consultancy Services for the period April 2006 to March 2009 which they did not pay. 3. Show Cause Notice dated 8.4.2010 was issued proposing to demand service tax under the above two categories. After due process of law, the original authority confirmed the demand, interest and imposed penalty. Aggrieved by such order, the appellant is now before the Tribunal. 4. On behalf of the appellant, ld. Counsel Shri M.N. Bharathi appeared and argued the matter. The details of the period and the amount is shown in the Table below:- Issue Period of dispute Value (Rs.) Payment made in foreign currency (license fees) to M/s. Sony Ericsson April 2007 to March 2008 1,97,50,836/- Payments made to foreign professionals and incidental expenses April 2006 to March 2009 94,53,955/- 2,92,04,791/- 5. With regard to the first issue, as to demand under Intellectual Property Service, ld. Counsel submitted as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy Software Service to fortify his contentions:- Information Technology Software Service (iv) Providing the right to use information technology software for commercial exploitation including the right to reproduce, distribute and sell information technology software and the right to use software components for the creation of an inclusion in other information technology software products. For specific exemption to packaged or canned software, refer para 57.9a. (vi) providing the right to use information technology software supplied electronically. He relied upon the case in Fluent India Pvt. Ltd. Vs. CCE, Pune reported in 2016 (42) STR 340 (Tri. Mum.) (c) The learned counsel adverted attention to the period involved under this category and relied upon the decision in the case of Indian National Shipowners Association Vs. Union of India reported in 2009 (14) STR 289 (Bom.) to submit that the services were not taxable under reverse charge mechanism before the introduction of section 66A in the Finance Act, 1994. The second submission made by the learned counsel is that even if the supply of software is taken as an activity falling under Intellectual Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is entirely revenue neutral as the appellant is liable to pay service tax under these two categories by reverse charge mechanism only. The appellant would be eligible for CENVAT credit and the situation is therefore entirely revenue neutral. He prayed that the appeal may be allowed. 6. The learned AR Shri Vikas Jhajharia appeared for the department. He adverted to para 12 of the impugned order. He stressed that the right to use software is a right to intangible property and therefore it falls under Intellectual Property Service. As per the agreement entered into between the appellant and M/s. Sony Ericsson, Sweden, the foreign company has exclusive right and title and interest on the software including Intellectual Property Right on the said software. The appellant is using the software for manufacture of their products. The license fee paid by the appellant for the right to use the software and it is not a purchase of a software. The demand raised under this category is legal and proper. On the second issue, with regard to Management Consultancy Service, learned AR referred to para 16 of the impugned order. The management or business consultant refers to any person who i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reverse engineer, decompile or otherwise use the Software without the express written consent of SEAB. SEAB shall be responsible for supply of upgrades of the Software as and when available. SEAB represents that the software supplied by it would meet the acceptance criteria and that it is fit for the purpose for which FOIN is acquiring it. 11. It is evident that the agreement is for right to use software and the activity will not fall under the definition of Intellectual Property Right Services. 12. It is also to be noted that software fees have to be treated as an IPR as registered outside India. Only intangible property which is registered within India would fall under IPR service during the relevant period. The software admittedly is registered outside India. We hold that the demand under Intellectual Property Right Service cannot sustain and requires to be set aside, which we hereby do. 13. The second issue is with regard to the demand under Management Consultancy Service. Admittedly, there is no agreement furnished by the department to establish that the appellant has received management consultancy service from M/s. Fox Conn, China. On perusal of the invo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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