TaxTMI 
TaxTMI 
2025 (4) TMI 2040
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....t for paying the Service Tax liability on 'Product Support Service' before the issuance of SCN, (ii) whether the license fee is subject to service tax, (iii) whether the Appellant has to pay tax on reverse charge mechanism (RCM) for 'consultancy services' availed and for Director's remuneration, (iv) whether extended period of limitation can be invoked on grounds of suppression of information with the intention to evade tax and (v) whether the penalty imposed on the appellant is tenable. 2. The Appellant M/s. IDS Next Business Solutions Pvt. Ltd. was engaged in business of software development, maintenance and product support service in the hospitality industry and registered under 'information technology software service' and under 'Management, maintenance or repair' service. Alleging that the appellant has not paid appropriate service tax on the service provided by them for the period April 2010 to March 2015, proceedings were initiated. Out of total service tax liability of Rs. 1,26,24,591/- under AMC and support services an amount of Rs. 95,84,794/- was paid from 17.03.2015 to 24.04.2015 and remaining amount of Rs. 30,39,397/- was paid through....
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....Vs. State of Andhra Pradesh, 2004 (11) TMI 11, wherein it was held that - "16. In India the test, to determine whether a property is "goods", for purposes of sales tax, is not whether the property is tangible or intangible or incorporeal. The test is whether the concerned item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed etc. Admittedly in the case of software, both canned and uncanned, all of these are possible." 5. Learned Chartered Accountant (CA) also draws our attention to the decision of the Hon'ble High Court of Karnataka in the matter of M/s. Infosys Ltd., reported in 2015-TIOL-2106-HC-KAR-VAT, wherein it is held that:- "40. The material on record discloses that finacle software, which is owned by the assessee as a packaged software, is a software before customization. The authorities call it as a software with standard features, where the customer requirements are already built in. In other words, these software, which is available on the shelf, is a copyrighted article. It is also known as a branded software. As is clear from the impugned order though the customer requireme....
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....rovision is not in India and the service provider is a foreign entity, the demand under reverse charge mechanism (RCM) is unsustainable. 8. As regards the service tax confirmed on the co-noticee/Appellants and recovery of the same from the appellant under RCM, learned Chartered Accountant (CA) submits that the Managing Director and Executive Director are full time employees of the appellant. Learned Chartered Accountant (CA) also draws our attention to the DIR-12 and Form 32 to substantiate that they are full time employees of the appellant. As per Section 65B(44) of the Finance Act 1994, an employee-employer relationship is out of the ambit of the definition of service. The said section is produced herewith "'service' means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Co....
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....on sale of such customized software, they cannot be exempted from payment of service tax. The contract is essentially for design and development of the software it would fall in the list of declared services under section 65E, of the Finance Act, 1994. The CD containing the development software is only a media to transmit or deliver the software. As regards the demand of service tax against product support service, learned AR fairly admits that the appellant had paid service tax before issue of the show-cause notice. However, since there is deliberate delay in making the payment, the appellant is liable to be imposed with the interest and penalty as applicable. 12. Learned AR also relied on the decisions of the Hon'ble High Court of Madras in the K7 Computing Pvt. Ltd., Vs. Commissioner of GST & C.Ex., Chennai South-2022 (58) G.S.T.L 31 (Mad.), K7 Computing Pvt. Ltd., Vs. Commissioner of GST & C.Ex., Chennai - 2021 (44) G.S.T.L 364 (Mad.) and Infotech Software Dealers Association Vs. Union of India - 2010 (20) S.T.R 289 (Mad.). 13. Heard both sides and perused the records. 14. We find that as regards extending the benefit of Section 73 (3) for the tax liability on 'pro....