TaxTMI 
TaxTMI 
2026 (1) TMI 156
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....ng the extended period of limitation. Thereafter Adjudication authority as per order dated 14.02.2011 confirmed the proposal in the show cause notice. Aggrieved by said order, present appeal is filed. 3. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that in the first-split period, the Appellant rendered software development and services in relation to information technology software services to its various customers as stated above. The Appellant in bona fide believed that software development and other IT software services rendered to customers in India being "information technology services" which was not taxable under any of the existing service category inasmuch as (i) "consulting engineer service as defined in section 65(31) r/w section 65(105)(g) of Finance Act, 1994 and the services in relation to 'computer software' was either exempted from payment of service tax vide notification No.4/99-ST dated 28.02.1999 which was in force upto 10.09.2004 or excluded from the "taxable service" definition in section 65(105)(g) post 10.09.2004 which was in force till 16.05.2008; (ii) definition of BAS in 65(19) of the Act e....
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....197) ELT 154 (SC). v. HPL Chemicals Ltd Vs. CCE, 2006 (197) ELT 324 (SC). 5. The Learned Counsel also draw our attention to the amendment letter for agreement No. 4903IN0416 dated 31.03.2005 where scope of the work is defined as "under this SOW, supplier will provide the software support development activities, including but not limited to, software development, software testing, publication development, maintenance, software development support or such other activities as may be defined by the buyer to the supplier in the relevant WM". Further as per clause 3.0 i.e., under Description of Developed Works And Related Deliverables and Services it is specified that the Services and Deliverables that may be required to be provided under this Agreement, either on Supplier's, Buyer's or Buyer's Customer's premises as specified in a Work Acceptance (WA) are comprehensive technical services. Accordingly. Supplier will provide a full range of technical personnel who possess Skills, for the following Skills References listed in 5.1. under Developed Works, it is specified that the Supplier agrees that all Deliverables, code or materials provided as part of the Serv....
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....rvices. In the event Supplier's Personnel ceases performing under a WA issued against this SOW within the first 30 working days for any reason other than Buyer's termination without cause, Buyer will not be billed for Services performed within such 30 working day period. In addition, replacement Supplier's Personnel (following a Supplier's Personnel who left during the first 30 working days) will be non-billable during the period for which it takes them to become proficient as a replacement. up to 30 additional working days". 8. The Learned Counsel further drew our attention to master service agreement dated 18.04.2005 entered by the Appellant with M/s Philips Software Center Pvt. Ltd. where M/s. Philips is inter alia engaged in the business of developing hardware and software for consumer electronics, telecommunication equipment, and personal multimedia software and hardware. ASMTL has experience in developing software related to, among others, embedded software, device programming, functional verification, system programming and multimedia. ASMTL has represented to Philips that it has sufficient expertise and resources to develop and provide the Services (as he....
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....tention of the parties executing the particular contract. That intention has to be primarily gathered from the terms and conditions which are agreed upon by the parties". Hence, the impugned order cannot be sustained. It is further submitted that the SCN has been issued entirely on the basis of presumptions and assumptions besides being vague and un-corroborative. The impugned order is also opposed to the decision in the case of Oudh Sugar Mills Ltd v. UOI, 1978 (2) ELT 172 (SC). 10. As regarding reimbursable expenses, the Learned Counsel submits that while assessing the service tax liability, the reimbursable expenses were also included in the value by invoking Rule 5 of the Service Tax (Determination of Value) Rules, 2005. The Appellant had received reimbursement of expenses as per agreement/contract towards travel, conveyance expenses, mail expenses, VISA expenses....etc which is reimbursable expenses. The issue is settled as per the judgment of the Hon'ble Supreme Court in the matter of Union of India Vs. M/s Intercontinental Consultant & Technocrats Pvt. Ltd. (2018 (10) GSTL 401 (SC) where it is categorically held that Rule 5 of the Service Tax (Determination of Value) Rule....
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....of assignment or to any location outside country of assignment but for duration less than 30 days, after beginning of assignment shall be reimbursed by Buyer as per IBM India travel policy. All such travel shall be with prior approval of concerned Project Manager and in line with the Purchase Order issued for the same. The reimbursement shall be against production of invoice accompanied by all supporting documents such as original Bills/ticket jackets/Project manager approval. No other charges/fees will be paid apart from the ones mentioned in the Purchase Order. Further as per the definition in the said agreement, the supplier person means, suppliers employees including their suppliers' employees deployed against valid PO/work acceptance issued by buyer. Further submits that as evident from Clause 6.6.1 regarding Supervision of Supplier's Personnel, Supplier shall be solely responsible for consistent supervision of its personnel provided under this Agreement, at no additional cost to Buyer. Supplier's supervisor shall have full supervisory authority over all dayto-day employment relationship decisions relating to Suppliers' personnel, including those decisions relating....
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....ervices. From the facts on record it is seen that the appellant had supplied personnel to M/s Infosys and other clients as per requirements of the latter. These personnel are utilized for development, enhancement, implementation and maintenance of software projects. It is also pertinent to note that such development, enhancement, etc., of software is not assigned to the appellants themselves, but is done only by M/s Infosys and the other clients. No doubt, the personnel so supplied may well be qualified software personnel Nonetheless, once such personnel have to function under the overall supervision, control and management of the client, the appellant is only providing services of Manpower Supply. The identical issue was addressed by other Bench in the case of M/s. Future Focus Infotech Pvt. Ltd. (supra) wherein this Bench after analyzing both the earlier decisions in Cognizant Tech Solutions (Final Order No 259/2010 dated 03.03.2010) and Future Focus Infotech India (P) Ltd. (Final Order Nos. 246-247/2010 dated 03.03.2010) came to the following conclusions: "6.4 Thus, there are discernable differences in the facts of the dispute in respect of Tribunal decisions in the app....
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....onal verification etc., the agreements were executed for development of the activity and not an activity exclusively for supply of manpower. Further, we find that at the relevant time Information Technology services was outside the scope of Service Tax as evident from the provisions of Finance Act, 1994. 15. Fact being so, incorporating the activities under the category as done by Adjudication Authority beyond the scope of provisions of law. This Tribunal while considering the issue M/s. Future Focus Infotech Pvt Ltd has verified the agreement and categorically held that such activity is excisable to Service tax under the category of Manpower Recruitment Service. Since as per the facts on record it is evident that appellant had supplied personnel to M/s. Infosys and other clients as per the requirement of the letter, these personnels are utilized for development enhancement and implementation of maintenance software project. But while considering the issue in the matter of Cognizant Tech Solutions, it is distinguished on the ground that Cognizant Tech Solutions they themselves responsible for the development of Information Technology software services whereas in respect of Futur....
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....ant could have been claimed by it as refund in terms of Rule 5 of the Cenvat Credit Rules, 2004". 17. Further we find that the issue while considered by the Tribunal in the matter of M/s Cognizant Tech Solutions (I) Pvt. Ltd. Vs. COMMR., LTU, Chennai (2010 (18) STR 326 (Tri. - Chennai), it is held that:- "10. We find force in the contentions made by the appellants that the work force recruited and retained by the appellants are required to work under a project manager appointed by the appellants who has to act as single point of contact being responsible for overall management of the project. From the arguments advanced from both sides, it is clear that the learned special counsel for the Department is not disputing that in the second stage of the project, the appellants would be providing functional service to Pfizer. It is also not in dispute that such functional service relating to data management, bio statistics and reporting will be provided through the very same manpower which has been recruited, retained and trained during the first phase. It has to be appreciated that recruitment and training precedes provision of specialized services. If it is accepted that the....