Ruchi Infotech Ltd. vs CCE, Indore

Sr. No.,Description,Period,Amount (Rs.)

1.,"Maintenance of computer

software",9.7.2004 to 31.3.2006,"31,56,723/-

2.,Lease Line Connectivity,5.9.2002 to 20.3.2007,"6,90,674/-

3.,Calibration of Machine,"July 2003 and March

2004","28,800/-

4.,Cartridge Refilling,2004-05 to 2006-07,"97,898/-

5.,Technical Support Charges,2002-03 to 2004-05,"10,83,360/-

,Total,,"50,57,455/-

Repair service. Seen in this light the demand of Rs.28,800/- also does not sustain on merit.",,,

Regarding demand of Rs.97,898/- pertaining to cartridge refilling sought to be covered under Management, Maintenance or Repair service, the",,,

Show Cause Notice merely states that the appellants have received certain cartridge refilling charges on which service tax is leviable under,,,

maintenance or repair service. The Show Cause Notice does not elaborate as to how cartridge refilling would come under the category of,,,

Maintenance or Repair service. It is argued by the appellants that refilling of ink in cartridges of customers actually tantamount to sale and therefore,,,

cannot be liable to service tax. In the impugned Order-in-Original, the following observation is made on this issue:",,,

“As discussed in earlier paras the noticee are doing activity of maintenance of computer/software. The goods consumed i.e. refilling of cartridge,,,

and amount collected towards refilling of ink in the process of such maintenance of computer/software are also liable to service tax.â€​,,,

Thus even the impugned order admits that this component of the impugned demand relates to charges for refilling of ink which evidently is in the,,,

nature of sale as contended by the appellants. Thus this component of the impugned demand also does not sustain on merit,,,

The Technical Support Charges recovered by the appellants are sought to be levied to service tax under “Scientific or Technical Consultancy,,,

Serviceâ€. Clause (92) of Section 65 of the Finance Act defines “Scientific or Technical Consultancy†to mean any advice, consultancy or",,,

scientific or technical assistance, rendered in any manner, either directly or indirectly, by a scientist or a technocrat, or any science or technology",,,

institution or organisation, to a client, in one or more disciplines of science or technology.†The appellants argued that the bills raised by them for",,,

Technical Support Charges are in relation to designing, developing and maintenance of software etc. which do not come under the scope of Scientific",,,

or Technical Consultancy Service. They have stated that the said activity is now covered under the new category of service called “Information,,,

Technology Software Service†introduced with effect from 15.5.2008 and they have been paying service tax under this category from that date.,,,

Indeed the CBEC D.O Letter No. 334/1/2008-TRU New Delhi dated 2th9 Feb. 2008 specifically states that by the Finance Bill 2008 the said service,,,

is being specifically included in the list of taxable services. It is seen that the appellants being a company (i.e. body corporate) cannot be called “a,,,

scientist†or a “technocrat†as a scientist or a technocrat would be an individual. They are evidently also not a science or technology institute.,,,

The appellants have argued they also cannot be called science or technology organisation. Even if it is possible for some with seemly soft corner for,,,

revenue to adopt some innovative logic and reasoning to show that having regard to the nature of expertise of the appellants, it would not be absurd to",,,

call them science or technology organisation, the fact remains that the term “science or technology organisationâ€​ is not defined in the Finance Act,",,,

1994 and arguably in common parlance organisations like the appellants are not generally referred to as science or technology organisations. In such a,,,

situation and having regard to the fact that the Show Cause Notice or the impugned order does not elucidate as to on what basis this component of,,,

demand was covered under Scientific or Technical Consultancy Service and also the fact that this activity specifically became taxable with effect,,,

from 15.5.2008, the appellants’ contention that they genuinely did not consider themselves to be science or technology organisation is not without",,,

considerable force. Consequently the allegation of suppression of facts and invocation of extended period simply cannot be sustained. As a result, as",,,

the period involved for this component of impugned demand is 2002-03 to 2004-05 and the Show Cause Notice was issued on 15.4.2008, this",,,

component of impugned demand is fatally hit by time-bar.,,,

Having discussed and given finding on each component of the impugned demand in the foregoing paras, no further discussion is really necessary but",,,

still, it may be pertinent to mention that in the entire Show Cause Notice, only the following (one) para contains the grounds for alleging suppression of",,,

facts for invocation of extended period :,,,

“The Noticee appear to have suppressed the facts regarding providing of services namely Computer Network Service, Management",,,

Maintenance or Repair Service, Business Auxiliary Services, Scientific or Technical Consultancy Services being provided by them by not",,,

obtaining registration in form ST I and by not filing ST 3 return wilfully with an intent to evade payment of service tax due on them. Thus,,,

extended period of 5 years for issue of Show Cause Notice as contemplated in Section 73 of Finance Act is invokable in the instant case.â€​,,,

In the circumstances of this case mere non-registration and non-filing of returns are totally insufficient to sustain the allegation of suppression of facts,,,

when the Show Cause Notice nowhere even remotely brings out as to how the appellants’ bona fides were suspect or what factors indicated the,,,

existence of an intention on their part to evade service tax. Indeed the Show Cause Notice para quoted above alleges suppression regarding providing,,,

of “computer network service†(among others) while there was no such taxable service during the relevant period. Thus, the Show Cause Notice",,,

itself can hardly be said to contain adequate basis/grounds to sustain the allegation of suppression of facts. But as stated in the beginning of this para,",,,

for the purpose of judgement in this case, no strength needs to be drawn from this para.",,,

In view of the foregoing the appellants’ appeal is allowed and the impugned order is set aside.,,,