TaxTMI 
TaxTMI 
2019 (5) TMI 464
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.... Sec.66A of FA,1994 read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994, demand notice was issued 0n 16.10.2009 for recovery of service tax amounting to Rs. 57,84,940/- with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 3. Learned Advocate Shri Vinay Jain for the appellant has submitted that, by an agreement known as 'software usage agreement' between the appellant and M/s Lear Corporation, USA, the appellant were allowed usage of the software procured by M/s Lear Corporation, USA and the charges paid by the appellant for usage of software was equivalent to the annual maintenance charges which M/s Lear Corporation, USA pays to various vendors of the software depending on the usage by the appellant. It is his contention that M/s Lear Corporation, USA has entered into an agreement with the vendors of software which provided them software licence. These vendors provided the software right to use basis to M/s Lear Corporation, USA and M/s Lear Corporation, USA has paid licence fees to these vendors. M/s Lear Corporation, USA, in turn recover the software usage charges paid to the overseas software vendors from ....
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.... the invoice, it is clear that the appellant paid charges towards software maintenance only. He has submitted that necessary evidence had been provided to the department and the copy of invoice and the agreements in terms of which it is clear that the appellant had received the right to use the software. Learned Commissioner mis-directed himself by the nomenclature used in the invoices without appreciating the terms contained in the software lease use agreements. 5. Further, they have submitted that maintenance and repair of computer software prior to 01st June 2007 under the category of 'maintenance and repair service' since not provided, hence not taxable. They have submitted that a specific Explanation was inserted in the definition of 'maintenance and repair service' as defined under Section 65(64) of Finance Act, 1994 so as to include 'software' as 'goods'. The said Explanation would be applicable only prospectively and not retrospectively. In support they refer to the decision of this Tribunal in the case of Phoenix IT Solutions Ltd v. Commissioner of Central Excise 2011 (22) STR 400 (Tri.-Bang), Kasturi & Sons Ltd v. Union of India 2011 (22) STR 129 (Mad.) and Oracle Finan....
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.... of Vodafone Cellular Ltd v. Commissioner of Central Excise, Pune - III. 7. Further, they have submitted that sharing of costs does not amount to provision of any service. It is their contention that the appellant had shared part of the total common cost incurred in respect of IT infrastructure by M/s Lear Corporation, USA. Such sharing at actual within group companies cannot be considered as provision of service by the overseas entity to the Indian arm. In support they refer to the judgment in the case of JM Financial Services Pvt Ltd v. Commissioner of Central Excise 2013-TIOL-757-CESTAT-MUM. Further, they have submitted that the entire exercise is since revenue neutral, therefore, no liability be fastened on the appellant. Besides they have also argued that since the issue relates to interpretation of statutory provisions and the appellant were under bona fide belief, therefore, extended period of limitation cannot be invoked and consequential imposition of penalty under various provisions also unwarranted. 8. Ld. A.R. for the Revenue reiterates the findings of the learned Commissioner. He has submitted that as per the software usage agreement, the Appellant was required to ....
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....aintenance and the support is 24*7. 18. The Noticee had entered into a Software Usage Agreement with M/s Lear Corporation, USA and accordingly, had been using the Design software. However, the issue under consideration does not pertain to demand of Service Tax on usage of software but pertains to demand of service tax on maintenance of software service received by the Noticee. As per the said agreement, the Annual Maintenance charges paid by M/s Lear Corporation, USA to various vendors who provide maintenance services in respect of software used by the noticee are to be borne by the Noticee. Accordingly, M/s Lear Corporation, USA were raising Bills on the Noticee for recovering such Annual Maintenance charges. The Bills clearly indicate that the amount charged to the Noticee is for software maintenance services provided and not for usage of software per se. 19. Thus, it is evident from 'Software Usage Agreement' and the Bills raised by M/s Lear Corporation, USA that the amount charged to the Noticee is for the maintenance of the software used by the Noticee. The contention of the Noticee that the payments made by them in foreign currency to M/s Lear Corporation, USA was towar....