In a major relief to M/s. Novartis Healthcare Pvt. Ltd, the appellant, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, ruled that Information Technology Software Services are taxable services under Section 65(105) of the Finance Act,1994.
The Appellant, is a company registered under Companies Act. It was providing Information Technology Software Services (ITSS) and Business Support Services (BSS) to its group companies namely Novarties Pharma AG of Switzerland and Novartis Pharmaceutical Corporation of USA, which Appellant asserts to be export of services.
As services were provided by the Appellant to its foreign group of companies that qualify the supplies as export of services, non-utilisation of those credits towards payment of Service Tax necessitated filing of refund application for refund of accumulated credits in every quarter, noted above, under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 05/2006 C.E. (NT) dated 14.03.2006 and it had suffered through the entire process noted above.
The Counsel for the appellant contended that the export invoices clearly indicate that Appellant had provided ITSS which is defined under Section 65(105)(zzzze) read with Section 65(53a) of the Finance Act, 1994 and BSS under Section 65(105)(zzzq) read with Section 65(104c) as defined during the relevant time and those are taxable services but Appellant was not paying Service Tax as it was exporting the services on bond.
He refuted the stand taken by the Commissioner (Appeals) in saying that all invoices are containing narration of the services rendered and his findings that in some invoices only the dollar amount is figuring is untrue for the reason that learned Commissioner (Appeals) had erroneously considered the invoice format (as to how an invoice should look like) annexed to the services agreement as invoice itself and made such an observation.
The Counsel for the Revenue submitted that the inputs and input services used for providing output services that were being exported were subjected to the conditions/restrictions of Export of Service Rules, 2005 or Central Excise Rules, 2002 as set out in the appendix and under Clause 3 of Export of Service Rules, 2005, taxable services are enumerated and the Appellant’s alleged services are not covered therein for which interference in the order passed by the Commissioner (Appeals) is uncalled for.
A Two-Member Bench comprising Dr. Suvendu Kumar Pati, Member (Judicial) and Anil G. Shakkarwar, Member (Technical)observed that “The services rendered by the Appellant are defined as taxable services under 65(105) of the Finance Act, 1994 but for the purpose of export only they were allowed to export the same without payment of Service Tax but that by itself would not put the services under the category of unentitled service, so as to deny Cenvat Credit and consequential refund to the Appellant.”
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