CESTAT, BANGALORE BENCH
Intelligroup Asia (P.) Ltd.
v/s.
Commissioner of Central Excise, Hyderabad
final order no. 927 of 2011
APPEAL NO. ST/1232 of 2010
DECEMBER 28, 2011
ORDER
M. Veeraiyan, Technical Member – This is an appeal against the order of the Commissioner of Customs, Central Excise and Service Tax, Hyderabad No. 10/2009-ST (Commr) dated 31.12.2009. The Commissioner by the impugned order confirmed demand of service tax of Rs. 67,30,132 for the period 1.4.2003 to 31.5.2003 and Rs. 53,33,39,143/- for the period 1.6.2003 to 31.3.2008 (excluding the period from 10.9.2004 to 28.2.2006 when the appellants availed the benefit of notification No. 16/2004 ST dated 10.9.2004) under the category management consultant/management and business consultant services. By the same order a sum of Rs. 2.33 crores stands confirmed holding that Cenvat credit availed/utilized on input services during the period -March 2006 to March 2008 were not eligible. Interest has also been ordered to be recovered in respect of the above demands. Equal amount of penalty stands imposed under Section 78 of the Finance Act. In addition, penalty under Section 76 (wrongly mentioned as section 77) stands imposed. A sum of Rs. 45,24,460/-paid by the appellants on domestic turnover during the period March 2006 to March 2008 stands appropriated and adjusted towards the service tax demand relating to the period 01.06.2003 to 31.03.2008 mentioned above.
2. Heard the learned Sr. Advocate Arvind Dattar, assisted by Ms. Rukmani Menon, Advocate on behalf of the appellant. Heard the learned Jt. CDR, Shri R.K. Singla on behalf of the department.
3. The relevant facts, in brief, are as follows :
(a) The appellants are providing the Enterprise Resource Planning (ERP) software system based services to various clients who are using ERP software packages. These services have been rendered based on agreements entered into with their clients. As per the agreements the following are the services provided by them to their clients.
(i) Implementation of application software like SAP, Oracle, Peoplessoft, etc.
(ii) Support of application system to remove operational constraints.
(iii) Assessing the requirements of the clients and devising and adopting the compatible system.
(iv) Hosting and performance of application support after the implementation of ERP package.
(v) Consultancy service on specific issues relating to ERP implementation, and
(vi) Upgradation of existing application software from existing release level to higher version.
(b) The appellants have paid service tax on claimed domestic turnover during the period from 01.03.2006 to 31.10.2008 and while paying service tax availed/utilized inputs service tax credit of Rs. 2.33 crores during the period October 2005 to March 2008 but failed to submit any documents in proof of receipt of such input services and the said services having nexus with the output service rendered by them.
(c) Show-cause notices dated 10/12/2007, 6/10/2006 were issued proposing recovery of service tax and also proposing recovery of credit allegedly availed and utilized irregularly and proposing imposition of penalties.
(d) The Commissioner, by the impugned order, confirmed the demand of service tax along with interest and imposed penalties as mentioned earlier.
3.1 Shri Arvind Dattar, learned Sr. Counsel assailed the order of the Commissioner on various grounds and made the following submissions:
(a) The appellants are engaged in rendering implementation services in relation to ERP Software to various clients in India and outside India, who have purchased ERP Software packages.
(b) The details of yearly revenue break-up for the relevant period as furnished to the department were as follows:
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