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2015 (10) TMI 2410 - CESTAT CHENNAI

2015 (10) TMI 2410 - CESTAT CHENNAI - TMI - Liability of Service Tax and Penalty Imposed CENVAT Credit on input services Maintenance of computer software and Manpower recruitment service Appellant contended that as per specific amendment under section 65 of Finance Act under category of maintenance and repair service w.e.f. 1.6.2007 where maintenance of software specifically includes computers and will have retrospective effect Further contended that they are providing IT Services which .....

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> Man Power Recruitment Service - Appellant's contention that they are not covered under Man Power Recruitment Service on ground that they have not utilized service and their another contention that providing of technical engineers from company is only incidental to software service is not acceptable Demand is sustainable.

Credit on input service utilized towards "Man Power Recruitment Service" during the period 10.9.2004 to 31.3.2006 - Once held that service tax is payable on Man .....

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tioner Shri L. Paneer Selvam, AC (AR) : For the Respondent ORDER Per R. Periasami The present appeal is filed against the order passed by Commissioner of Central Excise, Chennai-III. 2. The brief facts of the case is that appellant is a software firm carrying out various activities of maintenance and repair, man power supply etc. through their Business Solution Centres located at Chennai, Hyderabad, Gurgaon for which they have obtained centralised service tax registration from Chennai-III Centra .....

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he demand of service tax of ₹ 83,93,309/- and ₹ 16,61,679/- as service tax under respective services and also appropriated an amount of ₹ 55,15,784/- towards maintenance and repair service and ₹ 11,78,505/-towards man power recruitment or supply agency service and also appropriated interest paid by them of ₹ 1,96,861/- and also appropriated ₹ 1,33,886/- towards Educational Cess and also imposed penalty of ₹ 1,00,54,988/- and also imposed penalty of ͅ .....

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n the software maintenance service, he submits that the issue is no longer res integra as the government brought specific amendment under section 65 of Finance Act under the category of maintenance and repair service w.e.f. 1.6.2007 where maintenance of software specifically includes computers. He relied Hon'ble Madras High Court's decision in Kasturi & Sons Ltd. Vs UOI - 2011 (22) STR 129 (Mad.) He submits that the Hon ble High Court held that amendment was bought under section 65 i .....

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rincipal Bench decision of the Tribunal in the case of VGL Softtech Ltd. Vs CCE Jaipur - 2013 (31) STR 123 (Tri.-Del.). 3.2 On the second issue, viz. man power recruitment or supply agency service, he submits that they are not covered under the definition of man power recruitment or supply agency service and they are providing IT services which is a specialized service. They are not recruiting any person and the service became taxable only w.e.f. 16.5.2008 where the software services brought un .....

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round that he is not the proper authority. 4. On the other hand, Ld. A.R appearing on behalf of Revenue reiterates the findings of OIO. He drew our attention to para-22 of OIO and submits that Notification No.20/2003-ST dt. 21.8.2003 which granted exemption of service tax on maintenance or repair service was withdrawn vide Notfn No.7/2004-ST dt. 9.7.2004. Therefore, the adjudicating authority rightly confirmed the demand of service tax on the maintenance of software service after the rescinding .....

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s Vs State of Andhra Pradesh - 2004-TIOL-87-SC-CT-LB. 4.1 On the man power recruitment and supply agency service, Ld. A.R submits that the adjudicating authority has rightly confirmed the service tax. He drew our attention to paras 21 & 27 of OIO where the appellants have admitted providing of man power service and also paid service tax accordingly. Regarding cenvat credit on the input services service, he submits that appellants are not eligible for cenvat credit as input services were not .....

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y have all the documents and original invoices on the input services which can be readily verified. He submits that the adjudicating authority has not considered cum-tax benefit and also there is no suppression of facts and penalty cannot be imposed as the issue related to only interpretation of rules . The demand is also hit by limitation. 6. We have carefully considered the submissions of both sides and perused the records. The main issue to be decided in the present appeal relates to demand o .....

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llant, the period involved is July 2004 to March 2006. The adjudicating authority in the impugned order confirmed the service tax on the ground that there was specific Notification No.20/03-ST dt. 21.8.2003 which exempted service tax on the maintenance of software services and the said notification was withdrawn/rescinded by Notification No.7/2004 dt. 9.7.2004 and concluded that service tax is leviable on maintenance or repair of computer systems which includes maintenance of software. The Board .....

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Ltd. Vs UOI (supra) and also Hon'ble Supreme Court's decision in the case of UOI Vs Martin Lottery Agencies Ltd. 2009 (14) STR 593 (SC). This Bench of the Tribunal in the case of Financial Software Systems Pvt. Ltd. Vs CST Chennai (supra) by relying Hon'ble Madras High Court's decision in the case of Kasturi & Sons Ltd. (supra) allowed the appeal of the assessee. The relevant paragraph of this Bench Tribunal's order is reproduced as under :- "9. Considered the argume .....

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es causes adverse consequences to tax payers could have only prospective effect. Therefore case of Revenue as far as the first issue, is not maintainable." The Principal Bench of this Tribunal in the case of VGL Softtech Ltd. Vs CCE Jaipur (supra) held the identical view. The ratio of above decisions including this Bench decision in the cases cited supra is clearly applicable to the facts of the present case as the period involved in the present appeal is July 2004 to March 2006 which is pr .....

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ent or Agency Supply Service" is wide enough to include any commercial concern engaged in providing any service, directly or indirectly in any manner for recruitment or supply of manpower, temporarily or otherwise to a client. The appellant's contention is that they are not covered under Man Power Recruitment Service on the ground that they have not utilized the service and their another contention that providing of technical engineers from the company is only incidental to software ser .....

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