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TMI Blog2013 (2) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... to 30-8-2005. Notification No. 20/2003-Service Tax dated 21-8-2003 exempted taxable service in relation to maintenance or repair of computers, computer system or computer peripherals. However, Notification No. 20/2003-Service Tax, dated 21-8-2003 granting the above exemption was withdrawn vide Notification No. 7/2004-Service Tax, dated 9-7-2004. Consequently, maintenance and repair of software become liable to Service Tax from 9-7-2004 onwards. 2.1 Therefore, it appeared that the appellant were liable to pay Service tax on the income received towards maintenance of software. During the period from 9-7-2004 to 30-8-2005, the appellant had received an income of Rs. 2,04,12,456/- towards maintenance of software and were liable to pay Service tax of Rs. 20,82,070/-. 2.2 During the Audit, on scrutiny of Trial Balance for the quarter ending June 2007 it was also ascertained that the appellant had received an amount of Rs. 3,32,080/- as advance from the customers for the services to be provided by them but failed to pay Service tax on such amount. Hence it appeared that the appellant were liable to pay Service tax of Rs. 41,045/- on the advance received from the customers. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; that the appellant received Rs. 80,02,000/- towards implementation of software. Implementation of software is taxable only with effect from 16-5-2008 under Information Technology Software Services; (iii) that the definition of maintenance or repair under Section 65(64) of the Finance Act, 1994 was amended with effect from 1-5-2006 to include properties also and the explanation thereof stated that the term goods includes software with effect from 16-5-2008, the said definition was amended to clarify that 'properties' includes information technology software. Thus, maintenance of IT software was taxable only from 16-5-2008; (iv) that the issue no longer res integra and stands settled in favour of the appellant in the following cases :- (a) Kasturi & Co. v. Union of India - 2011 (22) S.T.R. 129 (Mad.) (b) EBZ online Private Limited v CCE, Pune - 2011 (22) S.T.R. 185 (Tri. - Mumbai) (c) SAP India Pvt. Ltd. v. CCE, Bangalore-III - 2011 (21) S.T.R. 303 (Tri. - Bang.) In all these cases, the ratio of the Hon'ble Apex Court decision in the case of Tata Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief that the said notification is not at all relevant for maintenance of software. 4. A personal hearing was held on 8-6-2011. Shri R. Srinivasan, Consultant appeared before me on behalf of the appellant for the personal hearing. None has appeared from the departmental side, despite intimation. 4.1 The advocate, during the hearing, in addition to reiterating the submissions made already in the appeal memorandum, have submitted that maintenance of Information and Technology Software is not liable to be taxed under Repair and Maintenance Service prior to the year 2008 since IT Software cannot be considered as "goods" as held by Tribunal Mumbai in the case of EBZ Online P. Ltd. v. CCE, Pune. 4.2 In addition to the above, he has also filed written submissions during the hearing which has been taken on record. 5. I have carefully gone through the records of the case, case laws and the submissions made by the appellant oral as well as written. The issues to be decided in the instant case are whether - (i) the appellant is liable to pay Service tax on maintenance of software during the disputed period, (ii) the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable to Service tax under Section 65(105)(zzg) read with Section 65(64) of the Finance Act, 1994. This instruction was given by the Board based on the decision of the Hon'ble Supreme Court in the case of Tata Consultancy Services v. State of Andhra Pradesh (Civil Appeal No. 2582 of 1998) reported in 2004-TIOL-87-SC-CT-LB = 2001 (129) E.L.T. 3 (S.C.) wherein it was held that software in media is 'goods'. During personal hearing the appellant had submitted a copy of Hon'ble Madras High Court's decision in the case of M/s. Kasturi & Sons Ltd. v. Union of India reported in 2011 (22) S.T.R. 129 (Mad.) wherein the Circular F. No. 354/132/2005-TRU, dated 7-10-2005 was struck down. As confusion was prevailing about the taxability of maintenance of computer software, Board has clarified that maintenance or repair or servicing of computer software is taxable w.e.f. 9-7-2004 vide F. No. 256/1/2006-CX.4, dated 7-3-2006. V. Board's Circular F. No. 256/1/2006-CX.4, dated 7-3-2006 regarding taxability of maintenance or repair of software is reproduced as follows : ''It may be recalled that Notification No. 20/2003-S.T., dated 21st Aug., 2003 exempting taxable se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Finance Act, 1994 before the period of Finance Act, 2006........" Before the amendment dated 1-6-2007, maintenance of software was not brought under maintenance or repair service. There were many circulars clarifying that the 'Computer Software' are also goods and hence taxable under maintenance or repair service. However, as per the Hon'ble Madras High Court's decision, Service tax is not liable to be taxed by way of Circulars without enabling provisions under Finance Act, 1994. Accordingly I hold that the appellant is not liable to pay Service tax prior to the period of 1-6-2007. 5.4 As the demand itself is held to be unsustainable, other issues raised by the appellant have become infructuous and hence were not taken for discussion. 5.5 Whether the appellant is entitled to the credit availed on the Service tax paid towards telephone and medical insurance of employees : This is a settled issue and before discussing the eligibility of credit availed on the disputed services utilized by the appellant, it is pertinent to mention at this juncture that the issue has been already settled by the Bombay High Court in the case of Ultratech Cement Ltd., reported in 2010 T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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