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Issues: (i) Whether commission or remuneration received for procuring orders and passing them to an overseas principal was liable to tax under the head of Business Auxiliary Service. (ii) Whether annual licence fee paid for software licences for the period prior to 16 May 2008 was liable to tax under the head of Online Information and Database Access or Retrieval Services, rather than Information Technology Software Service.
Issue (i): Whether commission or remuneration received for procuring orders and passing them to an overseas principal was liable to tax under the head of Business Auxiliary Service.
Analysis: The issue was treated as covered by an earlier decision in the assessee's own case, where such activity was held to amount to export of services under the Export of Services Rules, 2005. As the earlier decision had not been shown to be stayed, and the parties accepted that the controversy stood covered, no substantial question of law survived.
Conclusion: The service was not liable to tax under the head of Business Auxiliary Service, and the issue was decided in favour of the assessee.
Issue (ii): Whether annual licence fee paid for software licences for the period prior to 16 May 2008 was liable to tax under the head of Online Information and Database Access or Retrieval Services, rather than Information Technology Software Service.
Analysis: The Tribunal had found that the assessee discharged tax under the reverse charge mechanism by classifying the payment as Information Technology Software Service from 16 May 2008 onwards, and the Revenue accepted that classification for the post-2008 period. In that setting, the same service could not be said to fall under an earlier taxable entry for the pre-2008 period. The introduction of a new taxable entry from a specified date also indicated that the service was not covered by the earlier entry, and the new entry was not shown to be retrospective. On these admitted facts, no substantial question of law arose.
Conclusion: The annual licence fee was not liable to tax under the head of Online Information and Database Access or Retrieval Services for the pre-2008 period, and the issue was decided in favour of the assessee.
Final Conclusion: The Revenue's appeal failed in full, and the Tribunal's order was left undisturbed.
Ratio Decidendi: Where a later taxable entry is introduced prospectively, and the same service is accepted as falling within that later entry, the service cannot be retrospectively shifted into an earlier entry in the absence of retrospective operation or other legal basis.
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