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TMI Blog2021 (9) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... ony Ericsson, Sweden, it was observed by the department that the amount collected by them towards license fee was for using the software provided by them which would fall under IPR services. Since M/s. Sony Ericsson, Sweden does not have any office in India, the appellant has to discharge the service tax liability under reverse charge mechanism. The appellants did not pay service tax on IPR services. 2. It was further noticed that M/s. Fox Conn, China had provided Management Consultancy Service to the appellant. Chinese engineers were provided by M/s. Fox Conn, China to the appellant company from time to time as per the arrangement termed as "EXPART". There was no written agreement between the appellant and M/s. Fox Conn, China for rendering advice in the field of management, know-how, skills etc. The appellant had paid DA amount to the foreign engineers / professional to cover their incidental expenses. The payment of such amount would fall under Management Consultancy Service which was brought into the service tax net with effect from 16.10.1998. The appellants are liable to discharge service tax under reverse charge mechanism under Management Consultancy Services for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement entered into between the parties, it is clearly indicated that what has been granted to the appellant is a license for using the software for which license fee is fixed. Subsequent to such agreement, there has been electronic transmission of such software. Though the purpose for which the license had been granted is for use in manufacture, marketing, selling and distributing the products, in terms of the conditions of the agreement, the subsequent usage of the software has no bearing on the taxability of the service since services can be said to be completed on mere transmission of the software and downloading the same at the appellant's end. This event of downloading of software was completed in 2007, which was much before the period when Information Technology Software Service was brought into the taxable ambit. He also drew attention to the definition of Information Technology Software Service to fortify his contentions:- "Information Technology Software Service" (iv) Providing the right to use information technology software for commercial exploitation including the right to reproduce, distribute and sell information technology software and the right to use sof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransport and other expenses incurred by the foreign persons while they visited India. (e) The learned counsel also argued on the ground of limitation. He adverted to para 33 of the appeal paper book and submitted that audit was conducted in 2007. A letter was issued by department to the appellant alleging that Chinese professionals have imparted training and skills to the employees of the appellant factory for which appellant has made payments and therefore liable to pay service tax under Management Consultancy Service. To this letter of the department dated 24.5.2007, the appellant had replied on 28.5.2007 explaining that they have not paid any remuneration under Management Consultancy Service. In spite of this reply dated 28.5.2007, Show Cause Notice has been issued only on 8.4.2010 alleging suppression of facts thereby invoking extending period. (f) Moreover, the issue is entirely revenue neutral as the appellant is liable to pay service tax under these two categories by reverse charge mechanism only. The appellant would be eligible for CENVAT credit and the situation is therefore entirely revenue neutral. He prayed that the appeal may be allowed. 6. The learned AR Shri Vikas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... components for the creation of an inclusion in other information technology software products. For specific exemption to packaged or canned software, refer para 57.9a. (vi) Providing the right to use information technology software supplied electronically." 10. From the above definition, it is quite clear that the activity of appellant falls within Information Technology Software Service. The appellant has produced the copy of the software license agreement wherein para 3 reads as under:- "GRANT OF RIGHT TO USE SOFTWARE SEAB grants to FOIN the nonexclusive right to use SEAB's Software for the purpose of having manufacture, marketing, selling and distributing products to SEIN subject to the terms and conditions of this Agreement. FOIN shall not assign, sublicense, make available or otherwise transfer or disclose any right to use, develop, reverse engineer, decompile or otherwise use the Software without the express written consent of SEAB. SEAB shall be responsible for supply of upgrades of the Software as and when available. SEAB represents that the software supplied by it would meet the acceptance criteria and that it is fit for the purpose for which FOIN is acquiring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant company in imparting training and other skills to their employees and that the said activity would fall within Management Consultancy Service for which appellant is liable to pay service tax. On 28.5.2007, appellant has given detailed reply to this. In spite of this, the Show Cause Notice has been issued with much delay in 2010. On perusal of the letter issued by department, it is seen that after verification of accounts certain objections have been raised inter alia demanding service tax under the above categories. There is no positive act of suppression of facts or willful mis-statement brought out by the department so as to invoke the extended period. Further, the appellant is called upon to pay the service tax under reverse charge mechanism for the above two services. The appellant would be able to avail credit of the same and the situation is entirely revenue neutral. For these reasons, we hold that the demand is time-barred. The appellant succeeds on limitation also.
15. From the discussions made above, the impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced in open court on 29.09.2021) X X X X Extracts X X X X X X X X Extracts X X X X
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