Certificate issuance via licensed software is not software service or business support service when statutory definitions are not met.
Issuance of digital signature certificates and secure socket layer certificates, where the service provider merely uses licensed software to verify subscriber credentials, upload data and generate certificates, does not satisfy the statutory definitions of business support service, development and supply of content service, or information technology software service under the Finance Act, 1994. The activity involves use of software rather than development, adaptation, upgradation or consultancy in relation to software, and the same reasoning applies to SSL certificates. The classification adopted in the impugned order was therefore unsustainable, and the demand, interest and penalties could not stand; the appeal was allowed and the order set aside with consequential relief.
Issues: Whether the activity of issuing digital signature certificates and secure socket layer certificates was classifiable as business support service, development and supply of content service, or information technology software service, and whether the demand and penalties could be sustained.
Analysis: The activity was examined in the light of the statutory definitions of business support service, development and supply of content, and information technology software under the Finance Act, 1994. The certificates were issued using software developed and owned by Verisign, with the appellant merely using the licensed software to verify credentials, upload subscriber details, and generate certificates. The process did not amount to development, adaptation, upgradation, consultancy, or other specified forms of information technology software service. The Board and the Controller of Certifying Authorities had also clarified that issuance of digital signature certificates did not fall under business auxiliary service, business support service, or technical inspection and certification service, and that it would not attract information technology software service where the activity did not involve the specified software-related functions. Since the issuance of secure socket layer certificates followed the same operational model, the same reasoning applied.
Conclusion: The classification adopted in the impugned order was not sustainable, and the demand, interest, and penalties could not stand.
Final Conclusion: The appeal succeeded and the impugned order was set aside, with consequential relief to the appellant.
Ratio Decidendi: Mere use of licensed software to verify data and generate certificates does not constitute development or provision of information technology software service, nor does it amount to business support service or development and supply of content service when the statutory definitions are not satisfied.
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