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Sonata Information Technology Ltd. Versus Commissioner of Service tax, Mumbai

2017 (10) TMI 1192 - CESTAT MUMBAI

Repairs and maintenance of software - levy of service tax - whether classifiable under repairs and maintenance of goods or otherwise? - CBEC circular no. 70/19/03-ST dated 17.12.2003 - Held that: - even CBEC was not sure about the liability of service tax on the said services during the period 09.07.2004 to 06.10.2005. The first circular approving the liability of service tax on the said activity was issued on 07.10.2005 and the circular prior to that clearly held that the said service is not ta .....

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eal allowed - decided in favor of appellant. - ST/826/12 - A/90286/17/STB - Dated:- 23-10-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri Dayanand K., CA for the appellant Shri B. Kumar Iyer, Supdt.(AR) for the respondent ORDER Per: Raju This appeal has been filed by M/s. Sonata Information Technology Ltd. against confirmation of demand of service tax and imposition of penalty under Section 76 and 78. 2. Ld. CA for the appellants argued that vide circular no.70/ .....

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aintenance of goods and same would be leviable to service tax. This view was once again clarified vide Circular no.256/1/2006-CX.4 dated 07.03.2006 wherein it was clarified that service tax would be leviable on maintenance and repair w.e.f. 09.07.2004 i.e. Notification 20/2003-ST was rescinded. 3. Ld. CA further submits that they had discharged the service tax liability w.e.f. 07.10.2005 after the clarification of the board regarding leviability of service tax on repair of computer software. Ear .....

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statutory provisions by the Hon'ble High Court in Kasturi & Sons Ltd. - 2011 (22) STR 129. Ld. CA further pointed out that the show-cause notice has been issued invoking the extended period of limitation. He pointed out that even after audit a lot of time was taken to issue show-cause notice. He pointed out that appellants were filing service tax returns regularly and the show-cause notice was issued simply because there was change of mind of CBEC. He argued that even CBEC was of the op .....

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in various circulars of the Board. 5. We have gone through the rival submissions. We find that the CBEC vide circular no.70/19/03-ST dated 17.12.2003 had clarified as follows:- Subject : Clarification on the taxability of maintenance of Computer Software - Regarding. An issue has been raised whether the organisations who are engaged in design, development are maintenance of Software and enter into Annual Maintenance contracts for maintenance of their software, are exempt from Service Tax or not .....

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ed to maintenance or repair services in relation to computer, computer systems and computer peripherals vide Notification No.20/2003-S.T., dated 21-8-2003. As such computer software would form a part of computer systems would be covered under this notification. Under the category of consulting engineer vide Notification No.4/99-S.T., dated 28-2-99 taxable service provided to any person by a consulting engineer in relation to computer software is exempted. The definition of Business Auxiliary Ser .....

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d by issue of Circular no.81/2/2005-ST dated 07.10.2005 and Circular no.256/1/2006-CX.4 dated 07.03.2006. In these circular, following was clarified:- Circular no. 81/2/2005-ST dated 07.10.2005 Subject : Leviability of Service tax on maintenance or repair of software ... ... 4. Any service provided to a customer by any person in relation to maintenance or repair is leviable to service tax under section 65(105) (zzg) of the Finance Act, 1994. "Maintenance or repair is defined under section 6 .....

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