Service classification dispute: IT services treated as prima facie outside Business Auxiliary Service, supporting stay of recovery.

On a prima facie reading, system development and maintenance, computer operations and support were treated as Information Technology Service rather than Business Auxiliary Service. Because the demand related to a period before Information Technology Service became taxable on 16 May 2008, the applicant was considered entitled to waiver of pre-deposit and stay of recovery pending appeal. The analysis turned on the classification of the services reflected in the agreement and the fact that the relevant tax entry was not yet operative for the disputed period.

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Issues: Whether the applicant was entitled to waiver of pre-deposit and stay of recovery on the prima facie view that the services rendered were Information Technology Service and not Business Auxiliary Service.

Analysis: The demand covered a period prior to 16-5-2008. Information Technology Service became taxable only from that date. The agreement on record showed that the applicant was engaged in system development and maintenance, computer operations and support. On a prima facie reading, these activities fell within Information Technology Service rather than Business Auxiliary Service.

Conclusion: The applicant was entitled to waiver of pre-deposit and stay of recovery during the pendency of the appeal.

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