TaxTMI 
TaxTMI 
2024 (6) TMI 1507
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....ed the demand of duty and also imposed penalties under various provision of law. Aggrieved by said impugned order, present appeal is filed. 2. During the hearing, Learned Chartered Accountant (CA) for the Appellant submits that the service provided by the Appellant is in the nature of 'Information Technology Software Service' which are not liable to service tax during the period under demand and the same could not be termed as manpower supply as they were engaged in the activity of development and testing of software. Merely, if the billing was made on the basis of man days/man hours, said activity could not be termed as manpower supply service. The Department's contention is based on the nature of consideration received by them on manpower/man-hours basis and wrongly classified the demand of service tax under manpower recruitment or supply service. Further, Service Tax on Information Technology software was introduced only w.e.f 16.05.2008. 3. The Learned Chartered Accountant also drew our attention to the clarification issued by Ministry of Finance vide DO F No. 334/1/2003 - TRU dated 28.02.2003, where it is clarified that "computer enabled services namely data processing, ....
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....evelopment/customization, integration and testing b. IMS client integration c. Protocol Testing d. Camera Application Development e. In veiw of the above, it is evident that the scope of service is not to supply skilled staff as per customers requirement. The scope of services is to develop a software. 2. Nokia Corporation Clause 2 - Purpose of the Project plan - (page No. 46) Clause 3.2 - Responsibility of Nokia and Developer - (Page No. 47) As per Clause 3.2, Sasken is responsible for to perform the development and test the solution as required by Nokia. 3. Nokia Networks Clause 1 - Purpose of the Project Order- (Page No.53) Clause 1 of Appendix 1 - Project Scope - (Page No. 56) As per Clause 1, the agreement is for Software Development Subcontracting. Further as per the scope of services, Sasken is responsible to develop and test the software. 4. Nokia Networks Clause 1 - Project Scope Clause 2 - Deliverables - (Page No.62) As per the scope of services, Sasken is responsible for the Development of Managed Object Framework Desktop. 5. Learned Chartered Accountant also drew our attention to the jud....
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.... man hours/man days should be treated as a manpower supply service. If this manpower supply service. The real test of determining the nature of service is to go through the agreement to understand what is the deliverable which the service provider has to deliver to the service recipient. In this case, this deliverable service is the delivery of software services to the clients of the service recipients i.e., the appellant. We, therefore, are of the considered view that the demand made by the Revenue upon the appellant in the two show cause notices under the head "manpower recruitment or supply agency service" under reverse charge mechanism needs to be set aside along with interest and we do so. Consequently, penalties imposed upon the appellants under Section 76, 77 and 78 also need to be set aside and we do so." 7. The Learned Chartered Accountant for the Appellant also drew our attention to the decision of the Tribunal in the matter of Sak Soft Limited Vs. Comm. GST & CEx and as per the Final Order No. 40735/2021 dated 13.01.2021, it is held that; "22. It is pertinent to say that in the Order-in-Original, the original authority has discussed the agreements in reg....
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....ces of coverage (feature, news and comment) across the titles. As can be seen from the above, the services have been provided in Europe for the benefit of branches which are situated in Europe. In view of this, it was submitted that the services have not been received in India and accordingly, the appellant is not liable to pay service tax under reverse charge mechanism. 9. The Learned Chartered Accountant for the Appellant further submits that even if it is held that appellant is liable to pay service tax under reverse charge mechanism, the service tax paid by the appellant would have been available as CENVAT credit as such services would amount to input service used for providing the services to the overseas customer under the Cenvat Credit Rules, 2004. Further, the said CENVAT Credit available to the appellant could have been claimed by it as refund in terms of Rule 5 of the Cenvat Credit Rules. Hence, there is no revenue loss to the Government. Thus, the entire exercise to demand the service tax under reverse charge mechanism in respect of the above mentioned transactions is revenue neutral and accordingly, no demand can survive in such a situation. 10. Regarding limitati....
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.... of Advanced Computing Vs. CCE 2002 (141) ELT 6, wherein it was held that where assessee was under a bonafide belief, the larger period of limitation cannot be invoked on allegations of suppression. Further in Uniworth Textiles Ltd Vs. CCE 2013 (288) ELT 161(SC), it was held that if the assessee does not pay the duty due to bonafide belief, the larger period of limitation cannot be invoked. 13. Learned Authorised Representative submits that the issue is covered by the decision of the Hon'ble Supreme Court in the matter of CC, CE & ST, Bangalore (Adjudication) Vs. Northern Operating System Pvt. Ltd.- 2022 (61) G.S.T.L. 129 (SC), where it is held that such service are said to have provided manpower supply service. Learned AR also relied the following decisions. I. Future Focus Infotech India (P) Ltd Vs. CST 2010 (18) STR 308 (Tri. Chennai) II. Future Focus Infotech India (P) Ltd Vs. CST 2013 (32) STR J234 (SC) III. Future Focus Infotech India (P) Ltd Vs. CST 2018 (18) GLT 441 (Tri.Chennai) IV. Cognizant Tech Solutions (I) Pvt Ltd Vs. Comm 2010 (18) STR 326 (Tri. Chennai) V. Bharat Hotels Ltd. Vs. Comm. of C.Ex (Adjudication) - 2018(12) ....
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....e can be a suppression or misstatement of fact, which is not willful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be willful." 63. This decision was followed in Uniworth Textiles v. Commissioner of Central Excise [(2013) 9 SCC 753 = 2013 (288) E.L.T. 161 (S.C.)] where it was observed that "(t)he conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts" is "untenable". This view was also followed in Escorts v. Commissioner of Central Excise [(2015) 9 SCC 109 = 2015 (319) E.L.T. 406 (S.C.)], Commissioner of Customs v. Magus Metals [(2017) 16 SCC 491 = 2017 (355) E.L.T. 323 (S.C.)] and other judgments. 64. The fact that the CESTAT in the present case, relied upon two of its previous orders, which were pressed into service, and also that in the present case itself, the revenue discharged the later two show cause notices, evidences that the view held by the assessee about its liability was neither untenable, nor mala fide. This is sufficient to turn down the revenue's contention about the existence of "willful suppression" ....
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....ues related to the Development Work for NVO India Wireless Village Venture (WV) as well as perform such other services and duties set out in the main Agreement. The project target is to develop/enhance and test the WV system solution adhering to Nokia's product requirement Specification and Developments. In another agreement with M/s Nokia, it is specifically mentioned the purpose of the project order is for Software Development Subcontracting in relation to MOF Desktop Project Offshore and Düsseldorf Onsite Development. 16.3. Similarly, the work order details with M/s. Free scales semi-conductors, appellant will deliver complete verification test plan and strategy with discussions with Freescale team members. Appellant will deploy the methodology to develop the designated test cases for relevant IPs. They must adhere to Freescale's coding standards and regression methodology as specified in the methodology documents and meet the schedule described herein after for completion of verification of IP modules prescribed. It is expected that Sasken engineers are familiar already with industry standard verification languages, coverage and assertion tools. 16.4. Further....