Case Law Details
CESTAT, MUMBAI BENCH
3i Infotech Ltd.
versus
Commissioner of Service Tax, Mumbai-II
Order Nos. S/78/2013/CSTB/C-I & A/29/2013/CSTB/C-I
Application No. ST/STAY/828 OF 2012
Appeal No. ST/232 OF 2012
Date of Pronouncement- 14.01.2013
ORDER
P.R. Chandrasekharan, Technical Member
The appeal and stay application are directed against the Order-in-Original No. 06-08/ST-II/WLH/2012 dated 23/01/2012 passed by the Commissioner of Service Tax, Mumbai – II. Vide the impugned order service tax demand of Rs. 82,79,97,485/- has been confirmed against the appellant on account of ‘Maintenance and Repair Service’ and ‘Information Technology Software Service’, under Section 73 of the Finance Act, 1994 along with interest thereon under Section 75. A penalty of equivalent amount was also imposed under Section 78 ibid.
2. The learned counsel for the appellant submits as follows:
2.1 The appellant is engaged in providing software information technology (IT) solutions to their clients. While rendering the service they procured standard software and supplied the same to their clients on which they have paid VAT. They have also supplied hardware such as computers, printers and other peripherals to their clients. In respect of such supplies they have paid VAT. In addition to the above, they have developed software as per the client’s specifications and have supplied customized software to their clients. Thus, the transaction undertaken by them involves sale of software purchased from third parties, such as Oracle, Sybase, etc. on which VAT has been paid, sale of hardware and supply of customized software as per clients specifications. They have not rendered any ‘repair or maintenance’ services as alleged in the show-cause notice. The service undertaken by them with respect to development of software as per customer specifications and supply of the same to the clients would fall under the category of information technology software services on which they have discharged service tax liability. During the impugned period they have paid a sum of Rs. 1,05,56,489/- towards information technology software services in the regular course and a sum of Rs. 24,47,064/- along with interest of Rs. 8,51,854/- was paid after the receipt of the impugned order.
2.2 The learned counsel fairly admitted that when the show-cause notice was issued neither they filed any reply to the show-cause notice nor they appeared when the personal hearing was fixed, as they sought adjournment. If given an opportunity, they will be able to satisfy the department about the discharge of correct service tax liability on the activities undertaken by them.
3. The learned AR agrees that from the impugned order it is difficult to make out how the service tax demand has been computed and under what categories and, therefore, he also concedes that the matter needs to be remanded for reconsideration.
4. We have carefully considered the submissions made by both the sides. We have also perused the impugned order. From the impugned order, it does not come out clearly how the service tax liability has been computed. If the appellant has purchased from third parties and sold the same on payment of VAT and also supplied hardware on payment of VAT, the same would not be liable to service tax. The liability to service tax would arise only in respect of software which the appellant has developed as per customer’s specifications and supplied to their customers. Therefore, there is a need to go through the agreements entered into with the clients, bills raised for the services rendered and the goods supplied and the payments made towards service tax liability under the category of “information technology service”. Only after going through all these documents, correct service tax determination can be done. Accordingly, we remand the matter back to the adjudicating authority to consider the matter fresh after taking into account all the documentary evidences which the appellant would submit in support of their claim that they have discharged the service tax liability correctly. The appellant is directed to cooperate with the department and produce all the documentary evidences by way of sales invoices, contracts/agreements entered into with the clients and other necessary documents, and payment of service tax made in respect of the services rendered by them etc. The learned counsel has sought two months time for a compilation of all the documents and submission of the same before the adjudicating authority.
5. Accordingly, we direct the appellant to appear before the adjudicating authority on or before 31/03/2013 and submit all the documentary evidences mentioned above in support of their claim and thereafter, the adjudicating authority shall decide the matter in accordance with law after giving a reasonable opportunity to the appellant to make their submissions.
6. A Thus the appeal is allowed by way of remand. The stay application is also disposed of.
