Custom, Excise & Service Tax Tribunal Persistent Systems Ltd vs Pune Iii on 18 August, 2015 IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO: ST/470/2012 APPLICATION NO: ST/MA((Ors.)94129/2015 [Arising out of OrderinOriginal No. 46/PIII/ST/COMMR/201112 dated 21/03/2012 passed by the Commissioner of Central Excise & Service Tax, Pune  III.] For approval and signature: Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes Persistent Systems Ltd. Appellant versus Commissioner of Central Excise & Service Tax Pune  III Respondent Appearance: Shri Prasad Paranjape, Advocate for the appellant Shri K.S. Mishra Addl. Commissioner (AR) for the respondent Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 18/08/2015 Date of decision: 10/02/2016 ORDER NO: ____________________________ Per: C J Mathew: Pursuant to orderinoriginal no 46/PIII/ST/COMMR/201112 dated 21st March 2012, M/s Persistent Systems Ltd is before us seeking to quash the demand of tax and interest therein, appropriation of the amounts paid by appellant before issue of the show cause notice, and imposition of penalties under section 77 and 78 of Finance Act, 1994. 2. Though the impugned order relates to confirmation of demand of tax for rendering of maintenance and repair services for the period from 15th March 2005 to 31st December 2007 and of support services of business or commerce for the period from 1st May 2006 to 30th September 2007, the dispute of the appellant is limited to the tax of ` 37,32,184/ demanded for the former as well as the penalties imposed in the impugned order. 3. The appellant is a unit registered under the Software Technology Park scheme in the Foreign Trade Policy notified under the Foreign Trade (Development & Regulation) Act, 1992 and services many clients situated overseas by developing software for them, executing onsite software engineering consultancy and customising their own products for licencees. The clients require regular upgrading and enhancement of software installed on their systems to enable optimum performance for which they enter into maintenance contracts with the appellant. The servicing is carried out by employees in the Software Technology Park facility who use the internet to access the remote system and work on the remote installations. It is the consideration received in accordance with these contracts that are in dispute. 4. The primary contention of the appellant is that the tax is not leviable in relation to software for the period to which the dispute pertains. According to them information technology software service for use in the course, or furtherance of business or commerce  was made taxable by section 65 (105) (zzzze) of Finance Act, 1994 only from 16th May 2008 and hence any activity in connection with such was not exigible to tax. Learned Counsel for appellant placed reliance on the decision of the Tribunal in SAP India Pvt. Ltd v. Commissioner of Central Excise Bangalore [2011 (21) STR 303 (TriBang)] which placed all activities relating to maintenance of software within the coverage of section 65(64)(ii)(b) and not the head under which the demand has been confirmed in the impugned order. 5. The Tribunal after examining the various amendments and the taxability of information technology software reasoned that with the introduction of tax by section 65(105)(zzzze) on information technology software, legislative intention to distinguish between this and computer software is unambiguously clear and as all the circulars and decisions hitherto existing related to computer software those were not applicable to the activity performed by the service provider in re SAP India Pvt Ltd. 6. Learned Authorized Representative places reliance on the circular no 81/2/2005ST dated 7th October 2005 of Central Board of Excise & Customs that superseded no 70/19/2003ST dated 17th December 2003; the clarification in the latter that maintenance of software was not taxable under section 65(105)(zzg) of Finance Act, 1994 was held to be no longer valid after the decision of the Honble Supreme Court in Tata Consultancy v State of Andhra Pradesh [2004(178) ELT 22(SC)] holding that canned computer software is goods. Further reliance was placed on the decision of the Honble Supreme Court in Bhar