Case Law Details
Avaya Global Connect Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
Introduction: The Central Excise and Service Tax Appellate Tribunal (CESTAT) Ahmedabad in the case of Avaya Global Connect Vs Commissioner of Central Excise & ST presented an interesting analysis of tax liability. The issue revolved around the classification of software activation charges for a telecom system and their taxability under Business Auxiliary Service.
Analysis: In the case, Avaya Global Connect was charged with the tax liability for the activation of inbuilt software in the telecom system of EPABX. The department contended that as the activation of software was carried out post-sale of equipment, it should be taxed under Business Auxiliary Service. However, Avaya argued that the issue was already settled in their favour in a previous order for a different period. The Tribunal found merit in Avaya’s argument, referencing past case law and the constitutional definition of goods and services, establishing that the software activation charges fell under the scope of sales of goods and not service, and therefore, not liable to service tax.
Conclusion: In conclusion, the Tribunal’s ruling offered significant relief to Avaya Global Connect, reinforcing the interpretation of tax laws in relation to software activation charges. This case provides a strong legal precedent, potentially influencing how software activation charges are classified for taxation purposes in the future.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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