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2013 (2) TMI 484 - Commissioner - Service TaxMaintenance of software – Applicability before 1.6.2007 - Notification No. 20/2003 and Notification No. 7/2004 – Whether the appellant is liable to pay Service tax on maintenance of software during 9-7-2004 to 30-8-2005 under the category of “Maintenance and Repair Service” – Appellant realized consideration towards maintenance of Software from their customers for the period 9-7-2004 to 30-8-2005 – Held that:- Underlying principle in Kasturi & Sons Ltd. v. UOI[2011 (2) TMI 76 - HIGH COURT OF MADRAS] is that Service tax cannot be levied by issuing circular. Circular cannot override the provision of Finance Act, 1994. As per the decision in this case, Service tax is not liable to be taxed by way of Circulars without enabling provisions under Finance Act, 1994. Accordingly appellant is not liable to pay Service tax prior to the period of 1-6-2007 – In favour of assessee. Cenvat credit on the Service tax paid towards telephone and medical insurance of employees – In Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT ] it has been held that the assessee is entitled for input service credit of the services, which are availed in course of their business and manufacturing activity. Since appellant had utilized both the disputed services in relation to their business activity and in the course of their business activity - Appellant is entitled to the credit of input service availed by them on the Service tax paid towards telephone and medical insurance of the employees – In favour of assessee. Further appellants genuinely believed that software maintenance did not attract Service tax during the period from 9-7-2004 to 30-8-2005. - started paying Service tax w.e.f. 1-9-2005 even when the maintenance of software was not taxable - Therefore no suppression of facts with an intention to evade payment of Service tax - Entire demand for the maintenance of software and for wrong availment of ineligible credit is not sustainable as the ingredients to invoke the extended period under Section 73(1) of the Finance Act are absent in the instant case – set aside the order – Appeal allowed.
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