2011 (4) TMI 1105 - HC - Service Tax

Tribunal upholds software testing exemption from service tax pre-2008

COMMISSIONER OF ST., BANGALORE Versus RELQ SOFTWARE PVT. LTD.

The Tribunal's decision that testing and analysis of software are not subject to service tax before 16-5-2008 was upheld. The services were classified ... Classification - Technical Inspection and Certification Services - assessee preferred an appeal to the Tribunal contending that the services being rendered come under the category of testing and analysis of software which is covered under Section 65(105)(zzi) – Held that:- question falls squarely within the exception carved out in Section 35G, “not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment”, and the High Court has no jurisdiction to adjudicate the said issue, in the case of M/s. Mangalore Refineries and Petro Chemicals Limited (2010 - TMI - 206880 - KARNATAKA HIGH COURT) , the appeal is rejected as not maintainable Issues:1. Whether testing and analysis of software is covered under Section 65(105)(zzi) of the Finance Act, 1994.2. Classification of services provided by the assessee under Technical Inspection and Certification Services as defined under Section 65(108) of the Finance Act, 1994.3. Jurisdiction of the High Court under Section 35G of the Act to adjudicate the issue.Analysis:1. The appeal was filed by the revenue challenging the Tribunal's order that testing and analysis of software are not liable for service tax before 16-5-2008. The Tribunal categorized the services under Technical Inspection and Certification Services, not under Section 65(105)(zzi). The issue was whether the services fall under the latter category. The Tribunal's decision was based on the effective date of Section 65(105)(zzi), post-16-5-2008.2. The assessee provided Technical Inspection and Certification Services, leading to a demand for service tax for the period from July 2003 to May 2006. The Assessing Officer imposed penalties and interest, which the assessee appealed. The Tribunal upheld the classification under Technical Inspection and Certification Services, effective post-16-5-2008. The appeal raised the question of proper classification under the Finance Act, determining the liability for service tax.3. The High Court, under Section 35G, lacked jurisdiction to decide on the classification issue, citing precedent where such matters fall under the exclusive jurisdiction of the Apex Court. The High Court rejected the appeal as not maintainable, advising the Revenue to approach the Apex Court. The registry was directed to return certified copies for the Revenue's appeal filing.In conclusion, the judgment addressed the classification of services provided by the assessee, the applicability of Section 65(105)(zzi) of the Finance Act, and the High Court's jurisdiction under Section 35G. The decision emphasized the need for the Revenue to seek resolution through the Apex Court due to jurisdictional limitations.