TMI Blog2023 (2) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... eir use, from SSPSL would be covered under Section 65(105)(zzzze), if the service is found taxable during the relevant time. Since the Point of Taxation Rules 2011 came into effect only from 1/03/2011, it will not be of help in determining the relevant issue. Any person who purchases goods or services does it with the intention of using it. It is the common parlance understanding that a service can be said to have been delivered when it is done/ completed in a manner that would render its purpose satisfied to the person who sought it. In the context of the Information Technology Software Service, merely downloading the software onto his computer would not be of help to the said person, unless he can use it - The right to use information technology software supplied electronically would hence only commence at this point and is the critical event on which the liability to pay tax would get fastened as per the facts and circumstances of this Agreement. This being so the service has been supplied only after Information Technology Software Service was brought under the tax net and is hence subject to the levy. The Appellants reference to the Apex Court decision in Association of Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter are that UIIC was engaged in providing services under the category of general insurance services and insurance auxiliary service as defined under clause 55 of section 65 of the Finance Act 1994. During audit of their accounts by Revenue, it was noticed that M/s. SSP Sirius Ltd. UK (SSPSL) had provided application software technology i.e. Core Insurance Solution for use in the business of UIIC. Since SSPSL was incorporated in UK and have no permanent establishment in India, the appellants was found liable to pay service tax on the service provided by SSPSL, in view of section 66A of the Finance Act 1994. Consequent to the audit objection the appellants paid an amount of Rs.58,63,413/-, as pointed out by Audit, together with interest of Rs.10,75,491/- on 4.6.2010. They subsequently sought refund of the same as they were of the view that no tax was payable on the supply even prior to the introduction of the service in the Finance Act. Revenue, not convinced by their averments have after issue of show cause notice dated 08/06/2011, confirmed the duty amount and also imposed a penalty. 3. It is the appellants case that information technology software was supplied to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be neutral and should not depend on form of delivery. Such supply of IT software electronically shall be covered within the scope of the proposed service. The Appellant hence submits that the taxable event is rendition of service and which in their case is transmission or supply of software electronically. Since the Service of providing the right to use information technology software supplied electronically was completed in December 2007 itself as it was the date of downloading of the said software, the supply of such service was over before the levy came into force. Therefore, Commissioner s reliance of EULA with SSPSL in the impugned order to fix taxability of IT Service is not tenable. Further fixing the date or point of taxation as the date of raising invoice and payments made is to introduce the Point of Taxation Rules 2011, which came into effect later i.e. only from 01/03/2011. This being so, the completion of providing the service in the manner suggested in the order in original, would not postpone the liability of tax. Further the assessments in the case were provisional at the time of audit. The Appellant was also eligible to take credit of tax paid under revers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f use of a IT software would be the date on which it is downloaded or after the commissioning of the software. It is not disputed that the software was downloaded in December 2007 while the said service was brought under the tax net only on 16/05/2008. In this context, it would be relevant to reproduce Section 65 (105) (zzzze) of the Finance Act, 1994, below; To any person, by any other person in relation to information technology software for use in the course , or furtherance, of business or commerce, including, - (i) development of information technology software, (ii) study, analysis, design and programming of information technology software, (iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software, (iv) providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of a new system, specifications to secure a database, advice on proprietary information technology software, (v) providing the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.8.2005 operationalising it that the right to use the software can be said to have occurred. As per the EULA, the license to use the software in perpetuity was in consideration of the due payment by UIIC of license fee. Subsequently, SSPSL raised an invoice No. 6360 dated 22.7.2008 on UIIC for part payment of software license amounting to USD 1,240,460.50. The license to use the software was hence only granted after due payment. The right to use information technology software supplied electronically would hence only commence at this point and is the critical event on which the liability to pay tax would get fastened as per the facts and circumstances of this Agreement. This being so the service has been supplied only after Information Technology Software Service was brought under the tax net and is hence subject to the levy. The Appellants reference to the Apex Court decision in Association of Leasing and Financial Services Companies (supra) or the Circular / Letter DOF No. 334/1/2008-TRU dated 29.2.2008 does not come to their help as it does not deal with the determination of the point of taxation and only refers to the taxability of the service per se. 9. It is the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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