2013 (10) TMI 963 - AT - Service Tax

Tribunal grants waiver for pre-deposit on service tax liability pre-16.05.2008

The Tribunal granted the appellant's application for waiver of pre-deposit concerning service tax liability related to Management or Business Consultant ... Information Technology Services - Taxability of ERP related services i.e (a) ERP planning and advice. (b) Actual ERP implementation service involving implementation and adaptation of ERP software. - As regards ERP planning and advice, the appellants are discharging Service Tax liability under the management consultancy services. - However, with regard to the ERP implementation service, according to the Department, the said service would be liable to a tax under the category of management consultancy service, whereas according to the appellants, they would be taxable with effect from May 16, 2008 under the category of ‘information technology software services’ - Tribunal’s earlier decisions categorically held that such services falling under the category of consulting engineering services, however, they were exempted by Notification 4/99-S.T., dated 28-2-1999 and excluded from definition itself subsequently – In the present case, the ER implementation service is definitely for use in furtherance of business and commerce and the service under dispute is for the implementation. So, implementation of the ERP services is specifically covered under the information technology service, which was effective only from 16-5-2008. Under these circumstances, it cannot be liable to Service Tax for a period prior to that - Following decision of IBM INDIA PVT. LTD. Versus COMMISSIONER OF SERVICE TAX, BANGALORE [2009 (4) TMI 314 - CESTAT, BANGALORE] - stay granted. Issues:Waiver of pre-deposit of service tax, interest, and penalties under Finance Act, 1994 for Management or Business Consultant Services rendered during 2006-07 to 2009-10 on the basis of reverse charge mechanism.Analysis:The appellant filed a stay petition seeking the waiver of pre-deposit of service tax amounting to Rs. 58,45,029/-, along with interest and penalties under the Finance Act, 1994, related to the provision of Management or Business Consultant Services during the period from 2006-07 to 2009-10. The adjudicating authority confirmed the service tax liability on the basis that the appellant had rendered services using the reverse charge mechanism, specifically by paying an amount to a person situated abroad for purchasing the SAP system, also known as ERP.Upon hearing both parties and examining the records, the Tribunal noted a precedent set by a coordinate Bench in the case of IBM India Pvt. Limited vs. Commissioner of Service Tax Bangalore 2010 (17) STR 317 (Tri. Bang.). In this case, it was established that services related to the implementation of ERP systems fall under the category of Information and Technology Services effective from 16.05.2008. The Tribunal acknowledged that the appellant had deposited the service tax liability post the mentioned date, and the disputed service tax pertained to transactions that occurred before 16.05.2008. Referring to the case law, the Tribunal observed that the Revenue had appealed the matter to the Apex Court, which was subsequently dismissed, indicating finality regarding the service tax liability on ERP Implementation Services before 16.05.2008.Consequently, the Tribunal found that the appellant had presented a prima facie case for the waiver of pre-deposit concerning the amounts involved before 16.5.2008. As the appellant had already deposited the entire service tax liability and interest post 16.5.2008, the Tribunal granted the application for the waiver of pre-deposit for the remaining amounts and stayed the recovery process until the appeal's final disposal. The decision was dictated and pronounced in the Court by Mr. M.V. Ravindaran.