Dassault Systemes Simulia Private Limited Vs Commissioner of Central Excise and Service Tax (CESTAT Chennai)
CESTAT Chennai held that no documents are placed on record establishing that services are rendered in India, accordingly, service tax liability under management, maintenance or repair service unsustainable.
Facts- The appellant is engaged in the sale of software programme “Abaqus” to various customers. There was an audit conducted by officers of the Internal Audit Group of Service Tax Commissionerate, Chennai, wherein they appeared to have ascertained that the appellant’s Head Office was at U.S.A., from whom they purchase the software, enter into an agreement/contract with Indian customers for maintenance and enhancement of the software sold by them and that the appellant had incurred expenditure in foreign currency towards the purchase.
The Show Cause Notices reveal that the appellant offered various licence types to their customers and the revenue generated therefrom were duly reflected in their balance-sheet as Annual, Paid-up, MES and Academic and from the break-up details that were available from the appellant’s balance-sheet, it was ascertained that the expenses related to Academic, Paid-Up Annual And Monthly, were related to the purchase of software and MES-ME related to maintenance, enhancement and support of the software provided by the foreign companies to the appellant.
According to revenue, the same constituted management, maintenance or repair service with effect from 10.07.2004 and that therefore, the appellant being the recipient in India was liable to pay Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 read with Rule 2(i)(d)(iv) of the Service Tax Rules, 1994.
Conclusion- We are of the clear view that the appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service for the reason that there is no document placed on record to negate the appellant’s claim that they have not rendered any service in India and the Revenue has also not been able to place anything on record in their support to establish that the appellant had rendered nothing but management, maintenance or repair service.
FULL TEXT OF THE CESTAT CHENNAI ORDER
These appeals are filed by the assessee against the common Orders-in-Appeal No. 21 & 22/2011 (MST) dated 08.03.2011 passed by the Commissioner of Central Excise (Appeals), Chennai.
2. Brief facts, as could be gathered from the Show Cause Notices, which are relevant for our consideration, are that the appellant is engaged in the sale of software programme “Abaqus” to various customers. There was an audit conducted by officers of the Internal Audit Group of Service Tax Commissionerate, Chennai, wherein they appeared to have ascertained that the appellant’s Head Office was at U.S.A., from whom they purchase the software, enter into an agreement/contract with Indian customers for maintenance and enhancement of the software sold by them and that the appellant had incurred expenditure in foreign currency towards the purchase. The Show Cause Notices reveal that the appellant offered various licence types to their customers and the revenue generated therefrom were duly reflected in their balance-sheet as Annual, Paid-up, MES and Academic and from the break-up details that were available from the appellant’s balance-sheet, it was ascertained that the expenses related to Academic, Paid-Up Annual And Monthly, were related to the purchase of software and MES-ME related to maintenance, enhancement and support of the software provided by the foreign companies to the appellant.
3.1 The above facts appear to have weighed in the mind of the Revenue that the same constituted management, maintenance or repair service with effect from 10.07.2004 and that therefore, the appellant being the recipient in India was liable to pay Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 read with Rule 2(i)(d)(iv) of the Service Tax Rules, 1994.
3.2 To quote the Show Cause Notice: –
“4. 0 It appears that such service provided by the foreign company in respect of the software imported by the assessee falls under the category of management, maintenance or repair services with effect from 10.07.2004. As the expenses incurred by the assessee towards maintenance service relates to services provided by a person from a country other than India, it appears that the recipient in India is liable to pay the Service Tax under the reverse charge mechanism in terms of Section 66A of the Finance Act read with Rule 2(i)(d)(iv) of the Service Tax Rules, 1994.”
3.3 This prompted the issuance of Show Cause Notices, as detailed in the table below, for which the extended period of limitation came to be invoked by alleging that the “…assessee neither intimated the Department on the expenditure incurred by them in foreign currency, indicate such amount of expenditure in their ST-3 returns or in any manner…” which, according to the Revenue, amounted to suppression of facts with intent to evade payment of Service Tax.
