TaxTMI 
TaxTMI 
2025 (10) TMI 1195
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....1,73,09,192/- Aggrieved by this order, the appellant is in appeal before us. 3. The learned counsel at the time of hearing submitted that the appellant is engaged in providing information technology services and has expertise and skill in providing software testing, software consultation, software development and other similar services. During the period of dispute, they had entered into 2 agreements one with M/s. PSI Data Systems and the second one with M/s. Infosys Technologies Ltd. It is submitted that the appellant in bona fide belief considered only a few of their activities as manpower services and to that extent they had discharged the service tax and for the remaining services, which according to them were purely software services were liable to service tax only on or after 16.05.2008 after the introduction of Information Technology Software Services. Accordingly, in their ST-3 returns for the disputed period, they had clearly mentioned certain category of amounts that were of non-taxable value for which no service tax was discharged, hence, the question of suppression or mala fide intention does not arise. 3.1 It is further submitted that as per the agreements with M....
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....e reproduced below: 1. Services "(a) Performance: Modus shall depute sufficient number of its personnel on-site at the facilities of PSI's customers or as may be determined by the PSI from time to time. The services provided by Modus shall include the deputation of sufficient number of adequately trained personnel by Modus on-site at the PSI or such other location as decided by the parties hereto and the services related to software development rendered by such deputed personnel in the manner contemplated under this Agreement (the "Services"). Depending on the nature of each project, parties will implement this Agreement through Statements of Work for each project agreed to by both the parties, before commencement of the project. Statements of Work will essentially contain the commercial, technical and duration aspects covering the services. (b) Payment. PSI and Modus shall on a case-to-case basis agree upon the compensation for the performance of Services as may be detailed and prepared in a statement of work for each such specific assignment. All expenses incurred by Modus in performing the services including but not limited to compensation to personnel....
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....ltant is required to deliver under the relevant Task Orders. 2. SERVICES A. Consultant shall perform and deliver services under Tas Orders, in accordance with the milestone, delivery dates, specifications and requirements as set forth in such Task Orders. Infosys shall have no obligation with respect to any draft Task Order unless and until it is executed by Infosys. Except as otherwise provided in this Agreement expressly if any of the terms or conditions of this Agreement conflict with any of the terms or conditions of any Task Order, the terms or conditions of this Agreement shall control solely with respect to the Services covered under such Task Order. A sample copy of the invoice raised to M/s. Infosys Technologies Ltd. by the appellant is placed below: Ref. No. MODUS-INFY/3003/05 Vendor Code - 605320 Date: 5 April 2006 Place: Bangalore To: M/s Infosys Technologies ltd Banking Business Unit Building # 30/31, Plot # 44 Electronics City, Hosur Road Bangalore - 561229 Dear Sir, INVOICE In terms of your purchase order No. 4000004705 dated 3rd March 2006....
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.... to deviate from the conclusions and decision taken by this Tribunal, in the appellant's own case, for an earlier period, in Final Order Nos. 246-247/2010, dated 3-3-2010 in Appeal Nos. S/173/2008 & ST/220/2009 as reported in 2010 (18) S.T.R. 308 (Tri.-Chennai). We are therefore of the considered opinion that the activities of the appellant will definitely fall only within the scope of "Manpower Supply or Recruitment Agency Service" as defined in Section 65(105)(k) of the Finance Act, 1994. The appellants are therefore liable for discharging tax liability on the value of taxable services in respect of these services. 9. This Bench in the case of M/s. Aztecsoft Limited vs. CCE, Bangalore vide Final Order No. 20528/2024 dated 03.07.2024 observed as: "6.3. From Clause 2(h) of the same agreement under 'Testing and Acceptance', it is seen that in the case of 'Fixed Price Projects' the payments are based on acceptance of the deliverables after testing and subject to payment terms in the Statement of Work (SOW). While the payments in 'Time and Material Projects' billing will be proportionate for resources employed for less than a month and it will commence only after comm....
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....ind that appellant has been filing ST-3 returns during the entire period of dispute providing the details of taxable services under 'Manpower Recruitment or Supply Agency Service' and the value of exempted services which is not in dispute. Since the entire taxable value and non-taxable value is placed before the Revenue through their ST-3 returns, the question of suppression does not arise and hence, imposition of penalty cannot be sustained. Accordingly, the demands are confirmed only for the normal period along with interest. Appeal is partially allowed. (Order pronounced in Open Court on 28.10.2025.) ============= Document 1 SCOPE OF WORK between PSI Data Systems I inuted and MODUS WORKING ADDRESS: ABN Amro, Raheja Tommers E'Jemus, SERVICES TO BE PROVIDED: Time and Material B. sis as per the Agreement between Psl Data Systems and Modus . If required work will be performed in different slufts. One person month will involve 26 working days (o days m a week ) wnh & hrs por day. TECHNICAL ENVIRONMENT: Hardware Platform(s): P-III Operating Systems(s): Windows Applicationts): Testing RDBMS: APPLICABLE RESOURCES: Following resources ....