2017 (9) TMI 457 - AT - Service Tax

Business Auxiliary services - whether the assessee M/s Steria India Ltd are liable to service tax on receipt of Business Auxiliary Service in the nature of procuring orders for them for providing the exempt service of information Technology Software Service during the period January 2006 to December 2006? - Held that - so far the SCN relating to transactions with M/s Xansa PLC (UK) is concerned the SCN is bad as there can be no adjudication for the demand which have already been paid that is service tax paid - So far the demand with respect to transactions with Xansa USA is concerned during the relevant period the appellant was not providing any taxable service as Information Technology Software Service became taxable with effect from 16 May 2008 upon enactment of Section 65 (53a) in the Finance Act the appellant is not liable to pay any service tax on the transactions with Xansa USA during the relevant period - appeal dismissed - decided against Revenue.

Summary

Issues: Liability of service tax on receipt of Business Auxiliary Service for providing exempt IT Software Service during a specific period.

Analysis:
1. Background: M/s Steria India Ltd received services for procuring orders from overseas companies, leading to a dispute on service tax liability.

2. Service Tax Liability: The Department argued that services received by Steria fell under Business Auxiliary Service (BAS) as per the Finance Act, 1994, necessitating service tax payment on a reverse charge basis.

3. Contentions: Steria disagreed with the Department's view, claiming that services were related to the production and export of customized software, not qualifying as BAS.

4. Adjudication: The Additional Commissioner confirmed a significant demand against Steria, including interest and penalties under relevant sections of the Act.

5. Appeal: Steria appealed, leading to the Commissioner (Appeals) setting aside part of the demand and penalty, but confirming the rest.

6. Tribunal's Decision: The Tribunal reviewed the transactions with overseas companies, Xansa PLC (UK) and Xansa USA. It found that Steria was not liable to pay service tax on transactions with Xansa USA during the relevant period, aligning with the decision in Jetlite India Ltd case. The Tribunal allowed Steria's appeal, setting aside the confirmed demands and penalties. The appeal filed by Revenue was dismissed.

7. Conclusion: The Tribunal's ruling favored Steria, absolving them of service tax liability on transactions with Xansa USA. The decision highlighted the importance of understanding the nature of services provided to determine tax obligations accurately.