Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 402 - CESTAT MUMBAI

2016 (3) TMI 402 - CESTAT MUMBAI - 2016 (42) S.T.R. 890 (Tri. - Mumbai) - Taxability of maintenance and repair services relating to information technology software till December 2007 - Held that:- The articulation of legislative intent sought to be derived from this decision by the Central Board of Excise & Customs may not be tenable to the extent that it exceeds the compass of the cited decision. Therefore, the cited circular, relying as it does on the cited decision, does not permit for taxabi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

escription as computer software which is essential to start up and run the core programs of a system. ‘Information technology software' is essential for smooth running of the business activities of the user. Thus the clients of the appellant in this case would be users of ‘information technology software' and hence any maintenance of that software would be taxable only after 16 th May 2008 as decided by this Tribunal in re SAP India Pvt. Ltd. - The demand under ‘maintenance or repair service .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2 dated 21 st March 2012, M/s Persistent Systems Ltd is before us seeking to quash the demand of tax and interest therein, appropriation of the amounts paid by the appellant before issue of the show cause notice, and imposition of penalties under section 77 and 78 of Finance Act, 1994. 2. Though the impugned order relates to confirmation of demand of tax for rendering of maintenance and repair services' for the period from 15 th March 2005 to 31 st December 2007 and of support services of bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uting on-site software engineering consultancy and customizing their own products for licencees. The clients require regular upgrading and enhancement of software installed on their systems to enable optimum performance for which they enter into maintenance contracts with the appellant. The servicing is carried out by employees in the Software Technology Park facility who use the internet to access the remote system and work on the remote installations. It is the consideration received in accord .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or appellant placed reliance on the decision of the Tribunal in SAP India Pvt. Ltd v. Commissioner of Central Excise Bangalore [2011 (21) STR 303 (Tri-Bang)] which placed all activities relating to maintenance of software within the coverage of section 65 (64)(ii)(b) and not the head under which the demand has been confirmed in the impugned order. 5. The Tribunal after examining the various amendments and the taxability of information technology software' reasoned that with the introduction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e & Customs that superseded no 70/19/2003-ST dated 17 th December 2003; the clarification in the latter that maintenance of software was not taxable under section 65(105)(zzg) of Finance Act, 1994 was held to be no longer valid after the decision of the Hon'ble Supreme Court in Tata Consultancy v State of Andhra Pradesh [2004 (178) ELT 22 (SC)] holding that canned' computer software is goods. Further reliance was placed on the decision of the Hon'ble Supreme Court in Bharat Sanch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y software service' was not taxable during the period of dispute, the scope of taxability for rendering maintenance or repair services' as well as the issue settled by the Tribunal in re SAP India Pvt. Ltd needs to be examined to resolve the dispute before us. 8. With effect from 1 st July 2003 maintenance or repair service' was taxable as per section 65(105)(zzg) of Finance Act, 1994 with maintenance or repair' defined in section 65(64) therein. The definition underwent a change .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce or repair including reconditioning or restoration, or servicing of any goods …. and the Explanation therein with effect from 16 th May 2008 read as: For the removal of doubts, it is hereby declared for the purposes of this clause - (a) goods' includes computer software'; (b) properties' includes information technology software' 9. The widening of the tax net by increasing the services that were liable to tax since its inception in 1994 demonstrates clear legislative int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that very date. That the amended Explanation equated computer software' with goods', the maintenance or repair of which was taxable from an earlier date and equated information technology software; with property' only when information technology software' was made taxable prompted this Tribunal to draw a distinction between the two and hold that the activities of M/s SAP India Pvt. Ltd, which is distinguishable from the activities of the appellant before us only by the clients be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

circular no. 81/2/2005-ST dated 7 th October 2005 of Central Board of Excise & Customs which was issued consequent to the decision of the Hon'ble Supreme Court in re Tata Consultancy cited supra. 11. The finely tuned calibration that is demonstrated by the Supreme Legislature in the taxing of various services since 1994 is patently not reflected in the manner in which tax collection is sought to be enhanced by the Central Board of Excise & Customs (or, more probably, by overreach on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Hon'ble Supreme Court, the absence of intent to tax all software was apparent in the later inclusion of information technology software' in section 65 (105) of Finance Act, 1994. The circular relied upon by the learned Authorized Representative appears to be more of an opportunistic attempt to increase revenue rather than a deliberated interpretation of legislative intent. Certainly, in the light of subsequent distinguishing between the two categories of software for taxation, this w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat canned software' was the same as other software, the decision deliberately desistd from refining upon the different thus: "25. At this stage it must be mentioned that Mr. Sorabjee had pointed out that the High Court has, in the impugned Judgment, held as follows: ".......In our view a correct statement would be that all intellectual properties may not be 'goods' and therefore branded software with which we are concerned here cannot be said to fall outside the purview of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

red in holding that branded software was "goods". We are in agreement with Mr. Sorabjee when he contends that there is no distinction between branded and unbranded software. However, we find no error in the High Court holding that branded software is goods. In both cases, the software is capable of being abstracted, consumed and use. In both cases the software can be transmitted, transferred, delivered, stored, possessed etc. Thus even unbranded software, when it is marketed/sold, may .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot be tenable to the extent that it exceeds the compass of the cited decision. Therefore, the cited circular, relying as it does on the cited decision, does not permit for taxability of any software other than canned software' and reliance on that circular cannot appreciably sustain the findings in the impugned order. 14. 'Goods' are, therefore, and more particularly in the context of the new taxable entry of 2008, restricted to computer software, which appears to be interchangeable .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version