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TMI Blog2023 (8) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... l, Adv. Ms. Nisha Bagchi, Adv. Mr. Prashant Singh (i), Adv. For the Respondent : Mr. V.C. Bharathi, Adv. Mr. Mukesh Kumar Maroria, AOR Mr. H.R. Rao, Adv. Mr. A.K. Kaul, Adv. Ms. Nisha Bagchi, Adv. Mr. Prashant Singh (i), Adv. Mr. Vipin Jain, Adv. Mr. Mahesh Agarwal, Adv. Mr. Girish Raman, Adv. Mr. Vishal Agarwal, Adv. Ms. Sayaree Basu Mallik, Adv. Mr. Karan Verma, Adv. Mr. Abhinabh Garg, Adv. Ms. Tuhina, Adv. Mr. K. Ajit Singh, Adv. Mr. E. C. Agrawala, AOR JUDGMENT ABHAY S. OKA, J. FACTUAL ASPECTS 1. These two appeals arise out of service tax demands on the basis of four Show Cause Notices. The notices were issued under Section 73 of the Finance Act, 1994 (for short "the Finance Act") for the demand of service tax. The brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, MumbaiII made adjudication on the four Show Cause Notices. The Commissioner held that the services rendered by the assessee from 10th April 2004 up to 15th May 2008 in relation to software need to be classified under the category of "Intellectual Property Service" defined under Section 65 (55b) of the Finance Act. It was further held that from 16th May 2008 onwards, in relation to the software, the classification of service rendered should be under the category of "Information Technology Software" defined under Section 65 (53a) of the Finance Act. Thirdly, it was held that the value of the computer hardware items consumed for providing the services is required to be included in the valuation of the respective services in terms of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent period. The learned counsel appearing for the assessee supported the finding of CESTAT on the first show cause notice. 7. The learned counsel appearing for the assessee in support of its appeal firstly urged that by the judgment of CESTAT dated 14th January 2013, it was held that the software purchased by the assessee from third parties and sold the same on payment of VAT and the hardware sold on payment of VAT will not be subject to service tax. Secondly, as regards the finding recorded in paragraph no.10.16 of the impugned judgment regarding exemption in respect of supplies to a developer or unit in SEZ, he urged that in view of subsection (2) of Section 26 of Special Economic Zones Act, 2005 (for short, 'SEZ Act'), an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice. The first show cause notice covers the period from 1st April 2004 to 31st March 2009. The demand under the said show cause notice dated 19th October 2009 was for taxable service of "Management, Maintenance and Repair". The CESTAT found that the service of transfer of intellectual property rights was classifiable under the category of "Intellectual Property Service" till 16th May 2008 and was taxable in terms of Section 65(105)(zzr) of the Finance Act. In the Union Budget of 200809, a new service under the head "Information Technology Software" was defined separately under Section 65(53a) of the Finance Act. The said service was made taxable in terms of Section 65(105) (zzzze). Thus, the transfer of the right to use the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t show cause was illegal. Elementary principles of natural justice required that the adjudication on the basis of show cause notice should be made only on the basis of classification stated in the show cause notice. Assessee cannot be subjected to a penalty on the basis of a show cause notice containing a completely erroneous category of service. Therefore, the demand made on the basis of the first show cause notice was illegal. Therefore, we find that there is no merit in the appeal preferred by Revenue. APPEAL OF ASSESSEE 11. Now, we come to the other three showcause notices. We have carefully perused the findings recorded by CESTAT. As stated earlier, the other three showcause notices mentioned the correct classification. Reliance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise, the exemption notification referred in paragraph 10.16 will apply. 13. On this issue, the CESTAT held thus: " In terms of Notification No. 9/2009ST granted exemption to the specific services supplied to SEZ subject to condition that person liable to pay service tax shall pay service tax as applicable on the specified services provided to the developer or units of SEZ and SEZ shall claim refund of service tax on the services provided to the developer of SEZ. Notification No. 9/2009S. T was substituted by Notification 172011ST which provided exemption from service tax subject to condition specified therein. One of the conditions specified was that the exemption shall be provided by way of refund of service tax. Accordingly, during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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