TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 944
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.... business of UIIC. Since SSPSL was incorporated in UK and have no permanent establishment in India, the appellants was found liable to pay service tax on the service provided by SSPSL, in view of section 66A of the Finance Act 1994. Consequent to the audit objection the appellants paid an amount of Rs.58,63,413/-, as pointed out by Audit, together with interest of Rs.10,75,491/- on 4.6.2010. They subsequently sought refund of the same as they were of the view that no tax was payable on the supply even prior to the introduction of the service in the Finance Act. Revenue, not convinced by their averments have after issue of show cause notice dated 08/06/2011, confirmed the duty amount and also imposed a penalty. 3. It is the appellants case that information technology software was supplied to them electronically from abroad by SSPSL and downloaded in December 2007 prior to the introduction of the service in the Finance Act 1994, hence no tax could be levied on the subject supply. The appellant have raised the following issues in their appeal (I) whether service tax was payable on the supply of the said service even prior to its Introduction in the taxing statute; (II) Whether the ex....
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....supplied electronically' was completed in December 2007 itself as it was the date of downloading of the said software, the supply of such service was over before the levy came into force. Therefore, Commissioner's reliance of EULA with SSPSL in the impugned order to fix taxability of IT Service is not tenable. Further fixing the date or point of taxation as the date of raising invoice and payments made is to introduce the Point of Taxation Rules 2011, which came into effect later i.e. only from 01/03/2011. This being so, the completion of providing the service in the manner suggested in the order in original, would not postpone the liability of tax. Further the assessments in the case were provisional at the time of audit. The Appellant was also eligible to take credit of tax paid under reverse charge. This being so and considering that the matter involved an interpretation of law relating to taxability, extended time for issue of Show Cause Notice could not be evoked nor a penalty imposed. 6. It is the contention of Revenue that mere supply of IT software cannot be said to make the service complete unless other incidental activities are completed. Hence the date of downloading th....
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....in relation to information technology software for use in the course , or furtherance, of business or commerce, including, - (i) development of information technology software, (ii) study, analysis, design and programming of information technology software, (iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software, (iv) providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of a new system, specifications to secure a database, advice on proprietary information technology software, (v) providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products, (vi) providing the right to use information technology software supplied electronically" From a reading of the above section, it is....
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....nted after due payment. The 'right to use information technology software supplied electronically' would hence only commence at this point and is the critical event on which the liability to pay tax would get fastened as per the facts and circumstances of this Agreement. This being so the service has been supplied only after Information Technology Software Service was brought under the tax net and is hence subject to the levy. The Appellants reference to the Apex Court decision in Association of Leasing and Financial Services Companies (supra) or the Circular / Letter DOF No. 334/1/2008-TRU dated 29.2.2008 does not come to their help as it does not deal with the determination of the point of taxation and only refers to the taxability of the service per se. 9. It is the Appellants view that the assessments in the case were provisional at the time of audit. The Appellant was also eligible to take credit of tax paid under reverse charge. This being so and considering that the matter involved an interpretation of law relating to taxability, extended time for issue of Show Cause Notice could not be evoked nor a penalty imposed. Just because assessments are provisional would not be an i....