Witness Systems Software (India) Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Bangalore)
The CESTAT Bangalore decided two appeals filed against Orders-in-Original dated 09.02.2012 and 30.11.2015 concerning service tax demands on software-related services rendered by the appellant, a 100% Export Oriented Unit (EOU) and Software Technology Park of India (STPI) unit providing services to customers of its foreign parent company. The dispute was whether the services were classifiable as “Management, Maintenance or Repair Service” or constituted Information Technology Software Services/Business Auxiliary Services qualifying as export of services. The appellant submitted that prior to 16.05.2008 the services were not taxable as Information Technology Software Services had not yet been introduced, and thereafter the services qualified as export of services since they were rendered to the foreign parent company for consideration received in convertible foreign exchange. The Tribunal examined the Memorandum of Understanding, the statutory definitions of Business Auxiliary Service and Management, Maintenance or Repair Service, and the Export of Service Rules, 2005. It held that the appellant provided services on behalf of its parent company to the latter’s customers and, therefore, the services were correctly classifiable as Business Auxiliary Services rather than Management, Maintenance or Repair Services. The Tribunal further held that, under Rule 3(1)(iii) of the Export of Service Rules, 2005, the services qualified as export of services since the recipient was located outside India and payment was received in convertible foreign exchange. The Tribunal also noted that, following the Supreme Court’s decision in Commissioner of Service Tax-III, Mumbai Vs. Vodafone India Ltd. and Others, similar activities had been held to be export of services. On limitation, it held that the second show cause notice dated 17.10.2013 for the period 01.04.2010 to 31.03.2012 could not be sustained beyond the normal period as an earlier show cause notice on similar facts had already been issued on 13.10.2010. Accordingly, the Tribunal found no substance in the impugned orders, set them aside, treated the services as export of services, and allowed both appeals.
