Custom, Excise & Service Tax Tribunal Quick Heal Technologies Ltd vs Service Tax Delhi on 9 January, 2020 CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH COURT NO. 1 SERVICE TAX APPEAL NO. 51175 OF 2016 (Arising out of OrderinOriginal No.04/ST/201516 dated 28.01.2016 passed by The Additional Director General Of Central Excise Intelligence, [Adjudication]) Quick Heal Technologies Limited ....... Appellant th (Marvel Edge, Office No. 7010 C& D, 7 Floor, Viman Nagar, Pune, Maharashtra) VERSUS Commissioner of Service Tax, Delhi ....... Respondent (MG Marg.... IP Estate, 17B..... IAEA House.... IP ESTATE, Delhi110002) APPEARANCE: Shri M.H. Patil, Kiran Chavan, J.M. Sharma, Prasad, Prasad Tendulkar, Advocates for the Appellant Shri Vivek Pandey, Authorized Representative for the Respondent CORAM : HON‟BLE MR.JUSTICE DILIP GUPTA, PRESIDENT HON‟BLE MR. BIJAY KUMAR, MEMBER (TECHNICAL) DATE OF HEARING : 12 July, 2019 DATE OF DECISION: 09 January, 2020 Final Order No. 50022/2020 JUSTICE DILIP GUPTA This Appeal is directed against the order dated 28 January, 2016 passed by the Additional Director General (Adjudication) 1 by which the demand of service tax amounting to Rs. 56,07,05,595/ on the services alleged to have been provided by the Appellant from 1 1. Adjudicating Authority 2 SERVICE TAX APPEAL NO. 55701 OF 2014 March, 2011 to 31 March, 2014 has been confirmed with interest and penalty. 2. The Appellant is engaged in the business of Research and Development of Antivirus Software under the brand name ―Quick Heal‖. It contends that the unique selling proposition of all Antivirus Products/ Software is not only to eliminate the existing viruses from the computer system, but also to ensure ―virus free‖ environment for functioning of the computer system. Thus, all antivirus developers have to keep continuous surveillance on Viruses, Malware and Spam, and this is achieved by providing continuous updates to virus definitions. This enables ―AntiVirus Software‖ to maintain the computer system ―virus free‖. 3. According to the Appellant, during the disputed period from 1 March, 2011 to 31 March, 2014, the Antivirus Software was developed by M/s Softtalk Technologies Ltd., M/s Jupiter International Ltd. and M/s IP Softcom (India) Pvt. Ltd. for the Appellant in a ready to sell condition mentioning unique Key number (license key) and MRP. Being a Canned Software2, it was in the nature of ‗goods' and was subject to Sales Tax/ VAT and so no service tax was to be paid. This Antivirus Software was, therefore, sold by the aforesaid manufactures to the Appellant on payment of VAT. They were thereafter transferred by the Appellant to various Sales Offices of the Appellants from where the ultimate sale took place on payment of applicable VAT in the respective States. The Appellant claims that this activity was initially undertaken from Pune by sending the Master CD to the Replicators like M/s Sagarika Acoustronics Pvt. Ltd. and M/s Moser Beer India Ltd., 2 . Canned Software means that it is not specifically created for a particular customer. 3 SERVICE TAX APPEAL NO. 55701 OF 2014 who replicated the CD and supplied them to various branches/ sales offices of the Appellant, where the CDs were packed in boxes bearing MRP and sold after pasting a sticker bearing the license/ personal key number. The Appellant paid Central Excise Duty on such prepackaged Antivirus Software. The Jurisdictional Central Excise Authorities at Pune, however formed a view that each of the Sales Offices where the Software was packed had to take separate registration and pay Central Excise duty from each of the Sale Offices situated in different parts of the country and not from the main office at Pune. The Appellant, therefore, shifted the aforesaid activity to Baddi (Himachal Pradesh) and Rudrapur (Uttarakhand). 4. A show cause notice dated 2 February, 2015 was issued by the Additional Director General demanding service tax with interest and penalty. It was stated that the Appellant had supplied ―Quick Heal‖ brand Antivirus Software key/codes to the end users through dealers/distributors without discharging the service tax liability on such transactions. It was fu