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2023 (6) TMI 997 - CESTAT AHMEDABADLevy of Service Tax - management or business consultant service - agreement with M/s. CIBA Switzerland whereby it was agreed to share the costs incurred towards development of enterprise resource planning (ERP) software and reporting and replace existing system used by the appellant - reverse charge mechanism - penalties - HELD THAT:- The appellant have received services from foreign based provider namely CIBA, Switzerland and BASF, SEA, Singapore towards ERP system related services. As per the revenue, the said service up to 15.05.2008 is classifiable under management or business consultant service whereas revenue itself has admitted that the same services is classified under “Information Technology Software Service” w.e.f 16.05.2008. This clearly shows that the service received by the appellant towards implementation of ERP system related services is falling under “Information Technology Software Service”. Under this admitted position by the Revenue itself the said service cannot be taxed prior 16.05.2008 under “Management or Business Consultant Service” therefore, the service tax demand which is disputed up to 15.05.2008 is not sustainable under “Management or Business Consultant Service“. The very same issue under identical fact has been considered by CESTAT Bangalore in the case of IBM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [2009 (4) TMI 314 - CESTAT, BANGALORE] wherein it was held that it cannot be liable to Service Tax for a period prior to that. In the present case, the entire period is prior to 16-5-2008. The appellants have clearly shown that prior to 16-5-2008, even the services rendered by the appellant were excluded from the scope of consulting engineer‟s service and also the judicial pronouncements made it clear that they would not be covered under the management consultancy services. The service tax demand under the head of “management or business consultant service” for the period prior to 16.05.2008 is not sustainable - As regard the service tax liability for the period from 16.05.2008, the same has been discharged by the appellant along with interest. Hence, the same is maintained. Since the issue involved is of pure interpretational nature no mala-fide can be attributed to the appellant for non-payment or short payment of service tax, moreover, there is force in argument of the learned counsel that since the appellant was entitled for cenvat credit of the service tax demanded, entire issue is revenue neutral. The appellant has made out a strong case for wavier of penalties invoking Section 80 of the Finance Act, 1994 - penalties set aside - appeal allowed.
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