TaxTMI 
TaxTMI 
2008 (5) TMI 715
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....prehensive maintenance of hardware and software of the MICR Cheque Processing Solution with Imaging facilities. During the relevant period, which is actually from 1-8-2003 to 31-7-2004, the appellants did not pay the Service Tax and they claimed exemption under the above mentioned Notification No. 20/2003, dated 21-8-2003. The said Notification is reproduced below :- "Maintenance or repair services provided in relation to maintenance or repair of computers, computer systems or computer peripherals - Exemption from Service tax In exercise of the powers conferred by Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempt the taxable service provided to a customer by any person in relation to maintenance or repair of computers, computer systems or computer systems or computer peripherals, from the service tax leviable thereon under section 66 of the said Act." 4.1 As can be seen, the above Notification exempts from Service Tax in respect of the taxable services provided to a customer by any person in relation to maintenance or repair of computer, computer systems of computer ....
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....s been demanded along with penalties. The appellants strongly challenge the findings of the lower authority. Apart from relying on the Board's Circular, the lower authority and in fact, the show cause notice also relies on the Final Order of this Bench No. 1174/2004, dated 2-7-2004 [2004 (173) E.L.T. 149 (Tribunal)] in which the goods "Refurbished Stacker Modules with Accessories" were subject matter of classification and the Tribunal upheld the Department's contention and classified the machine under 8472.90 and its parts under 8473.40. This decision and also has been relied on in the show cause notice to show that the MICR Cheque Processing Solution is not a computer system and it is something like an ATM Machine for which Board has given clarification. On these two grounds, the lower authority has come to the conclusion that the appellants are not entitled for the benefit of the exemption Notification. It appears that he has not gone through all the submissions made by the appellant with regard to the system for which the appellant had undertaken the Annual Maintenance Contract. In order to appreciate the factual situation, two hearings were given. The second hearing was....
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....for a period of 12 months therefrom, to be renewed annually by the Purchaser for the agreed period of maintenance of 10 years, at a time for a period of 12 months only, by communicating to the Vendor in writing that the Purchaser has agreed to renew this Agreement for another period of 12 months, subject to the terms and conditions in this Agreement. This Agreement will also cover the comprehensive, the maintenance of the Stacker Modules under each Reader/Sorter at NCC, Mumbai inclusive of the IBM 4758 Crypto Card, personal computer system on which this Crypto Card has been installed and the IBM 2212 Router, one each at the Mumbai Regional Office, with effect from February 1, 2001." 4.6 On going through the above details and the write-up given by appellant and also after going through all the photographs and the functions of the system, it is very clear that the Stacker which is also part of the Document processor, is only a part of the entire system. In fact, the Document Processor consists the input and also the output device of the entire system. The output the stacker in which the cheques are sorted finally on certain criteria, which may be bank-wise or branch-wise and all t....
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.... the Agreement itself, the total cost of maintaining the entire system is given. They have given the maintenance cost in respect of the stacker module also. When we go through those figures, the stacker modules themselves, their maintenance charges are only 8% of the total cost. These figures are as follows :- While the consideration towards maintenance of stackers is Rs. 44,27,034/-, the consideration towards maintenance of the main frame systems and other peripherals is Rs. 3,92,45,530/-. But, the Learned Adjudicating Authority has demanded Service Tax on the entire amount. If at all the Learned Adjudicating Authority had decided that the stacker is not a part of the computer system, relying on the Board's clarification regarding ATM and also the decision of this Tribunal, then he should have limited himself to demanding Service Tax only on the maintenance charges of stackers. However, even with regard to the high end servers and various other system equipments, he had demanded Service Tax holding that they are all not part of the computer system or they are not computer system but are only a machine like ATM. This approach is totally wrong. We find that equipments supp....