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2016 (11) TMI 1446 - CESTAT BANGALORE100% EOU - Management, Maintenance or Repair service - Business Auxiliary Service (BAS) - Information Technology Services (ITS) - nonpayment of service tax - Held that: - as regards Management, Maintenance or Repair (MMR) Service, the present issue is a debatable one and differing view-points have been expressed in the decisions of the Tribunal as well as various higher judiciary, we are of the view that the demand under this category should only be confirmed within the normal period of limitation - the matter is remanded to the original adjudicating authority for purpose of quantification of demand. Business Auxiliary Service (BAS) - supply of the software to the foreign customers and transfer of the licence - the assessee pays to the subsidiaries/sub-contractors, the relevant charges - reverse charge mechanism - Held that: - If such an arrangement is to be placed within India, it would be a case of levy of service tax under BAS. However, since the service has been carried out on foreign soil, we need to examine the law from the perspective of whether assessee is liable to pay service tax under BAS on reverse charge basis, in terms of Section 66A of the Act, read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - In the instant case, the recipient (assessee) of service (BAS) is in India. The service have been provided by the subsidiaries/sub-contractors, who stand paid by the assessee. The instant case is, therefore covered for demand of service tax under BAS on reverse charge basis under Section 66A of the Act read with the said Rules - However, when we look at the nature of the service rendered abroad, we find that it is in the nature of Information Technology Service (ITS). There was an exclusion for ITS from the definition of BAS which was deleted only with effect from 16-5-2008 when the service of ITSS was introduced in the statute. Consequently, there can be no demand for service tax under BAS up to 15-5-2008. Consequently, demand is upheld under BAS only from 16-5-2008 and the matter is remanded to original authority for requantification of demand.. Whether in the present case, if the assessee pays the service tax demanded, the same will be available to themselves by way of Cenvat credit - revenue neutrality - Held that: - Since neither of the services is in the nature of input service, Cenvat credit will not be allowable to the assessee even if the service tax is paid. Consequently, the plea of revenue neutrality merits rejection. Penalty u/s 76, 77 and 78 - Held that: - there is no justification for imposition of any penalty on the assessee, keeping in view of the fact that levy of service tax on Information Technology Software Service was newly introduced with effect from 16-5-2008 only. Appeal allowed in part and part matter on remand.
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