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2023 (8) TMI 125 - AT - Service TaxClassification of services - facility for accessing and retrieving date from the common server with the aid of SAP software for accounting and other purpose through private international lease lines - Computer Network Services / Online Information and Database Access or Retrieval Service or Information Technology service, provided from a remote location outside the taxable territory? - extended period of limitation - penalty - HELD THAT:- It is found that ‘Computer Network Services’ means the inter connection of one or more computers. “Online Information and Data Base Access or Retrieval or both in Electronic form through Computer Network” relates to providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network. Whereas ‘Information Technology Software’ service covers the manipulation or interactivity provided to a user on any representation of instruction, data sound, or image including source code or object code by machines of a computer or an automatic data processing machine. It has been admitted in the Order in Original that the appellant has installed a common server and implemented SAP in the premises of BPLSL for use by the appellant for access and retrieving data from the common server with the aid of SAP software for accounting and other purposes through international lease lines. Hence it is clear that the activity rendered by the appellant is basically related to manipulation of data and not merely the inter connection of one or more computers or the access or retrieval of data - the classification of the service under dispute as a computer network service is not correct. The services are correctly classifiable under ‘Information Technology Software services’ which have been introduced only with effect from 16.5.2008. The nature of the services are such that it can be provided online from a remote location outside the taxable territory also. The service provided from a remote location outside the taxable territory, to recipients in India would be taxable under the reverse charge mechanism. The appellant has placed reliance of Hon’ble Bangalore Tribunal’s decision 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 ERP implementation, which the appellant asserts is equivalent to the services rendered in the present case, falls under the category of ‘Information Technology Software’ services only with effective from May 16, 2008. Extended period of limitation - penalty - HELD THAT:- The appellant has agreed that leased line services are classifiable under ‘Computer Network Services’ from 2006 onwards and has paid the service tax thereon. Since the issue has been decided on merit and the appellant having paid the dues under the correct service classifications, the question of extended time limit does not arise nor are any penalties imposable. The disputed service to be defined under Section 65(53a), being a taxable service under Section 65(105)(zzzze) of the Finance Act, 1994 as ‘Information Technology Software’ service from 16.5.2008 - impugned order set aside - appeal allowed.
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