The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chandigarh Bench quashed service tax demand on Management, Maintenance or Repair Service as the activity was undertaken from outside India through Internet.
As far as the demand under Maintenance or Repair Service, the counsel submitted that the demand has been confirmed with respect to the services of software upgradation and maintenance in respect of software installed in systems located in India. However, the entire activity has been undertaken from outside India and no part of the same was ever carried out inside India.
The counsel for the appellant submitted that the demand under Management, Maintenance or Repair Services cannot sustain prior to 01.06.2007 because the Management, Maintenance or Repair of technology software was not taxable prior to 01.06.2007.
It was further submitted that as per Rule 3(ii) of Taxation of Services ( Provided from outside India and received in India ) Rules, 2000 such services shall qualify as import only if the services are performed in India whereas in the present case, the services were provided outside India.
A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “As regards, the demand under Management, Maintenance or Repair Service, we find that the demand has been confirmed with respect to the services of software upgradation and maintenance in respect of software installed in systems located in India but the entire activity has been undertaken from outside India through Internet.”
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