Tribunal rules in favor of appellant on service tax dispute

The Tribunal held that the demand of Rs.64,11,347/- for business auxiliary services was not payable by the appellant as the services provided were classified as export of services. Additionally, the demand of Rs.31,78,587/- for Intellectual Property Right services was deemed unjustified as the Revenue's claim was barred by limitation since the activities were known since 2008, and the appellant started paying service tax under a different category from 16.5.08. The Tribunal granted relief to the appellant, ruling that the longer period of limitation was not applicable in this case.

---

---

Issues:
1. Whether the demand of Rs.64,11,347/- for business auxiliary services is liable to be paid by the appellant.
2. Whether the demand of Rs.31,78,587/- for Intellectual Property Right services is justified.
3. Whether the longer period of limitation can be invoked by the Revenue due to non-payment of service tax.

Analysis:
1. The Tribunal considered the appellant's contention that the services provided, involving procuring orders for their overseas parent company from India, should be classified as export of services. The Tribunal referred to previous decisions supporting this view. The learned DR agreed with this argument, leading the Tribunal to prima facie believe that the demand of Rs.64,11,347/- is not payable by the appellant.

2. Regarding the balance demand of Rs.31,78,587/- for Intellectual Property Right services, the appellant argued that the services provided fell under Information Technology Software Services introduced from 16.5.08. The appellant claimed that they started paying service tax under this category from the mentioned date. The Revenue contended that the services were Intellectual Property Right services based on the terms of the agreement. However, the Tribunal noted that the appellant began paying service tax under a different category from 16.5.08, and the demand raised in 2011 was barred by limitation since the Revenue was aware of the activities since 2008. The Tribunal held that the longer period of limitation was not applicable in this case.

3. The Tribunal further emphasized that if the Revenue classifies certain activities under a newly introduced category, those activities cannot be considered taxable under a different category before the introduction of the new one. Referring to previous decisions, the Tribunal concluded that the appellant was entitled to an unconditional stay, considering the Revenue's acceptance of the service tax liability under Information Technology Software Services from 16.5.08 onwards. The Tribunal ordered accordingly, granting relief to the appellant.

---