TMI Blog2024 (2) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of some of the activity of service received from the board, whereas in respect other activities, they have not paid the service tax under a bona fide belief that those are related to software services. On the entire services they have been paying service tax while providing services to M/s Reliance Industries Ltd. It is also fact that whatever service tax was paid on the part of the activity i.e. project management and validation service, the appellant have availed the Cenvat credit and they are discharging the service tax in respect of overall services which includes all the activity of service received form abroad, while forwarding to M/s Reliance Industries Ltd. - the entire exercise is revenue neutral. In this position, no mala fide can be attributed to the appellant as there is no intent to evade payment of tax due to revenue neutrality of the case. It is settled law that when there is a revenue neutrality in any demand no suppression of the fact can be attributed to the assessee. The present case is on much batter footing as the appellant has paid service tax on the part of the activity of the service received from abroad. Therefore, there was no suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Training system service 3,952 5 Application software FAT 27,226 6 Validation 5,84,460 7 Complete URS Development 35,578 8 Travel and living expenses 1,47,023 9 Remote operator station 22 nos. (Supply of goods) 2,47,562 Total : 26,58,325 The contract value of the said contract was increased on two occasions by US $ 3,31,704 and US $ 3,44,660 and thus, total contract value was US $ 31,60,029. 1.2 The appellant has paid service tax under reverse charge mechanism on project management services and validation services under management consultant services and availed the credit of the same. The appellant has not paid service tax on the balance services as either same were relating to the software services, reimbursement of services or supply of goods. The Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctioning of Delta V system as per the requirement of M/s.RIL. These software were located in CD form by M/s.FRS. b) Skid FAT (ON T M basis) Protocol execution for $ 1,92,725/- : The above software were loaded from CD form into Delta V System. After loading of the software, the function of the system were check on test basis. It is only a process of testing the software with the system. c) Training System Service for $ 3,952/- : The operation of the software were explained to the persons of the customer by giving the training. This service is called as Training system service. d) Application Software FAT for $ 27,226/- : It is testing of software activity to ensure that the software is developed based on customer s specification and requirement and make the necessary corrections in case of any deviations. It can be seen that the above services are related to software only. It will be further evident from the comparison of the activity narrated in the order placed on M/s Fisher Rosemount System Inc Life Sciences and order received from M/s Reliance Industries Ltd. that the major work of Installation Commissioning of DCS System has been carried out by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Software Engineering Service received from abroad. The same will clearly not taxable up to the period of 16.05.2008. Further, by relying upon the said judgment, Ahmedabad tribunal in the case of BASF INDIA LTD VERSUS C.C.E. S.T. -SURAT-II 2023 (6) TMI 997 - CESTAT AHMEDABAD, has also held that the department can not demand the service tax on the software related services under the category of management or business consultant services. It is further submitted that In the case of Basti Sugar Mills Co. Ltd. v. CCE [2007] 7 STR 431 (New Delhi-CESTAT), the tribunal observed that the definition of management consultant envisaged advisory service only and not management functions or executable services. The department s appeal against the said order was dismissed by the supreme court in Commissioner v. Basti Sugar Mills Co. Ltd. - 2012 (25) S.T.R. J154 (S.C.). In the present case there is development, installation and commissioning of Delta V System and not mere advice or consultancy and thereby will not be liable to service tax. 2. The service for which demand was made was subsumed in the total service and it s value which was charged by the appellant to their client ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the part of the same service charges. The tribunal has further held that the issue is also revenue neutral in nature and therefore set aside the demand. In the present case, the company executed an order for Supply of Delta V System and service contract for installation and commissioning of the DCS system for Reliance Industries for its Life Sciences Project at Mumbai. The Life science being a new to India and is also complicated subject, company has sub-contracted major part of the Service Order to M/s Fisher Rosemount vide letter bearing no. RLS-LSFBIC/001 dtd. 02.09.2005. The appellant has obtained service tax registration under the category of Commissioning and Installation Services as service provider for services provided to Reliance Industries Limited and paid the service tax on the whole contract value. Thus, the appellants have already paid service tax on the services rendered to M/s RIL. Part of the services are rendered by M/s FRS. The appellants have raised invoice on M/s RIL which includes the value of service rendered by M/s FRS. Therefore service tax on the entire service has already been paid. Therefore it is submitted that the service tax cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand has been made on reverse charge basis are directly linkable to the output services provided by the appellant and thereby situation is revenue neutral and thus service tax cannot be demanded. The same has been approved by the supreme court. The appellant further relies upon the following judgments : Coca-cola India Pvt. Ltd. 2007 (213) ELT 490 (SC) Indeos ABS Ltd. 2010 (254) ELT 628 (Guj) Indeos ABS Ltd 2011 (267) ELT A 155 (SC) 5. Entire demand is barred by limitation. The show cause notice was issued in November 2010 whereas the demand raised for the period prior to March 2006 to March 2008 and thus entire demand is barred by limitation. As already explained in detail the appellant had bona fide belief that the software related are outside the purview of service tax and hence service tax was not paid on the said portion. In the case of CONTINENTAL FOUNDATION JT. VENTURE 2007 (216) E.L.T. 177 (S.C.), Supreme court has held that Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Further held that in the case wherein interpretation is involved then extended period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sub-contractor. The show cause notice also admit that in para 9 that the project order issued by the customer namely M/s.RIL on the Appellants is a single contract and the service provided by M/s.FRS cannot be recognized as a separate activity. Earlier, there were various circular which had clarified that sub- contractor need not pay service tax if main contractor pays the service tax. The some of which are as follows : Frequently asked Questions Published by Director of Publicity and Public Relation, Customs and Central Excise, New Delhi, October, 2003 - 2003 (158) ELT (T33) Trade Notice No. 53-C.E. (Service Tax)/97, dated 4-7-1997 of the New Delhi Commissionerate Trade Notice No. 5/98-Service Tax, dated 14-10-1998 of the Indore Commissionerate Subsequently, only vide circular No. 96/7/2007-ST dated 23-8-07 it was clarified that Service Tax is payable by sub-contractor also. The supreme court in the case of SUCHITRA COMPONENTS LTD 2007 (208) E.L.T. 321 (S.C.) has held that the Beneficial circular to be applied retrospectively while oppressive circular applicable prospectively. Further, in the case of SHIVA INDUSTRIAL SECURITY AGENCY PVT LTD 2023 (7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prima facie classifiable as software services in view of the judgment in the case of IBM India Pvt. Ltd (Supra) and the services of software came under the tax net w.e.f. 16.05.2008. However, without going into the merit of the case, we are of the view that the appellant have made out a strong case on limitation. In the present case against the same contract the appellant have been paying service tax in respect of some of the activity of service received from the board, whereas in respect other activities, they have not paid the service tax under a bona fide belief that those are related to software services. 4.2 Moreover, on the entire services they have been paying service tax while providing services to M/s Reliance Industries Ltd. It is also fact that whatever service tax was paid on the part of the activity i.e. project management and validation service, the appellant have availed the Cenvat credit and they are discharging the service tax in respect of overall services which includes all the activity of service received form abroad, while forwarding to M/s Reliance Industries Ltd. In this case, if at all there is any tax liability as claimed by the department the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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