TaxTMI 
TaxTMI 
2023 (9) TMI 656
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....rprise Resources Planning (hereinafter referred to as "ERP") System from them. The parent company had charged to its subsidiary company for the said ERP system. The appellant had paid Rs .72,71,565/- for the year 2006-07 and Rs. 11,10,672/- for the year 2007-08. The ERP system was to be used by the appellant for business related activities such as pay roll proceeding, accounts management etc and for these uses, though computer will be used, yet these activities cannot be termed as activities primarily in relation to computer system and cannot be classified under the category of "Information Technology Service". The use of computer is secondary and the primary activity is that business related work. Hence, the department considered that the providing ERP system was a taxable service and to be classified under the category of Business Auxiliary Service, and liable to pay service tax of Rs. 8,98,776/- and Rs.1,37,279/- for the period 2006-07 and 2007-08 respectively. In this case, since the service provider (parent company) is located outside India, hence, the service recipient is liable to pay service tax under provision of Rule 2(d)(iv) of the service Tax (Amendment) Rules, 2002 w.e....
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....o reconsider the issue afresh." The learned Commissioner (Appeals) once again dismissed the appellant's appeal. Therefore the present appeal is before us. 2. Shri S.J. Vyas, learned counsel appearing on behalf of the appellant, at the outset, submits that the demand was confirmed under the head of Business Auxiliary Service which during the relevant time clearly excluded the IT Service and there is no doubt that the ERP System procured from their head office at USA is an IT Service, therefore, the same is not taxable. In support of his submission, he placed reliance on the following judgments: DATAWARE & M/S P.RC ASSOCIATES KURNOOL 2008 (3)TMI 33-CESTAT BANGALORE FEDERAL BANK LTD 2008 (11) TMI 115 - CESTAT-BANGALORE BASF INDIA LTD 2023 (6) TMI 997-CESTAT AHMEDABAD CCE VS L&T LTD 2015 (8) TMI 749 (SC) SHRESTH LEASING & FINANCE LTD 2022 (7) TMI 768-CESTAT AHMEDABAD 2.1 He further submits that after the amendment in BAS when the exclusion of IT Service was removed, the appellant started paying service tax which is not objected by the department, therefore, the classification of service under Information Technology Service was not q....
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.... of exclusion from Business Auxiliary Service. This issue is supported by following various judgments: DATAWARE & M/S P.RC ASSOCIATES KURNOOL 2008 (3)TMI 33-CESTAT BANGALORE "5. The relevant portions in the contract are reproduced below for understanding the scope of the services rendered by the appellants. (3) The Accounting Agency shall upload and download the data from the Spot Billing machines directly either by departmental staff or by spot billing agencies on regular basis and the data in other formats shall not be accepted to avoid data manipulation. (4) The Accounting Agency shall validate the spot billing data furnished by the Departmental Staff or Spot Billing Agency with the software maintained and analyze the correctness of the bills issued to the consumer duly furnishing reports on regular basis. (5) The Accounting Agency shall prepare the D-list of defaulting consumers every month by the 3rd of succeeding month and furnish it to the concerned ERO on the same date. The Agency shall also prepare the "D" list for defaulting consumers as and when required in the middle of the Month. The AAO/ ERO in turn will handover the returned D-L....
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.... (9) APCPDCL contemplates implementation of Common (Software) Billing System and S.A.P (ERP). The Agency shall modify Accounting system compatible to these modules. 6. On going through the above, I find that the appellants are required to generate various MIS reports given in Para 6 of the contract and to develop the software for this purposes. Therefore, it would not be correct to state that they had not carried out Data Processing task. The services clearly fall under the scope of "Information Technology Services" and thereby they are excluded from the scope of "Business Auxiliary Services". In view of the above, I allow the appeals with consequential relief." FEDERAL BANK LTD 2008 (11) TMI 115 - CESTAT-BANGALORE "7. On a careful consideration of the matter, we find that Cash Management Services would be taxable under the category of Banking and other financial services only with effect from June 2007. The period involved in this case is 1-7- 2003 to 31-3-2005. It is very clear during this period the Cash Management Service is specifically excluded. When the service is excluded from the scope of Banking and other financial services, the intention of ....
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....-S.T., dated 28-2-1999 initially and later by excluding it from the scope of "consulting engineering services" in the definition itself. Once a particular service is excluded from the scope of service tax where it normally is supposed to fall then it cannot be taxed under some other category. This principle has been followed in the case laws of Federal Bank. Ltd. and also LalPathlabs Ludhiana, Collection Centre cases which have been cited earlier. However, w.e.f. 16-5-2008, information technology service was introduced. The definition of information technology service is "any service provided or to be provided to any person 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, up gradation, 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....
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....t be taxed under some different existing entry prior to the enactment of new service entry for the reason that the introduction of the new service itself shows that since the same was not taxable under the existing entry prior to its introduction the same was not taxable prior to its introduction, for this reason also the revenue itself admitted that very same service of ERP implementation is classifiable under "Information Technology Software Service" w.e.f 16.05.2008 and the same was not taxable prior to this date under management or business consultant service, for this reason also the demand for the period prior to 16.05.2008 is not maintainable. 4.1 As regard the service tax liability for the period from 16.05.2008, the same has been discharged by the appellant along with interest. Hence, the same is maintained. Since the issue involved is of pure interpretational nature no mala-fide can be attributed to the appellant for non-payment or short payment of service tax, moreover, there is force in argument of the learned counsel that since the appellant was entitled for cenvat credit of the service tax demanded, entire issue is revenue neutral. Considering this undisputed....