Relief to Yamaha Motor Solution, No Service Tax payable under consulting engineer’s service for Advisory Support Service: CESTAT [Read Order]

The Chandigarh bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in a ruling in the case of Yamaha Motor Solutions India Pvt. Ltd has held that Service Tax is not payable under Consulting Engineer's Service for Advisory Support Service. The CESTAT viewed that during the period in dispute, the activities of the appellant were exempted by Notification No. 04/1999 dated 28.02.1999 and Circular No. 70/19/2003-ST dated 17.12.2003. The appellant was a 100% subsidiary of Yamaha Motor India Pvt. Limited ( Yamaha India ) during the period under consideration. It was engaged in the business of rendering software development and other information technology services to Yamaha India. The appellant has received a show cause notice wherein it was alleged that the appellant's services to Yamaha India are taxable under the category of consulting engineer's service. The appellant filed a detailed reply to the show cause notice and explained that its activities were exempted from tax through notification 04/1999-ST dated 28.02.1999, as these services are about computer software. After following due process, the Additional Commissioner of Service Tax, confirmed the demand as proposed in the said show cause notice by observing that the activities fall within the taxable category of consulting engineer's service. The Additional Commissioner has denied the benefit of the exemption Notification No. 04/1999-ST dated 28.02.1999 on the ground that the appellant's activities are not predominantly like software development only. He has also imposed penalties as proposed in the show cause notice. The appellant filed an appeal before the Commissioner of Central Excise (Appeals) Delhi – IV, Faridabad who rejected the appeal of the appellant and confirmed the demand for service tax on the ground that the activities of the appellant are not exclusively related to computer software service. The Commissioner (Appeals) has also confirmed the demand for interest and penalty. It was submitted that CBEC has appointed several officers through its service tax order no. 1/1/94 dated 29.07.1994 as amended from time to time. Under this order, officers were appointed for assessment and collection of service tax. He further submits that once an officer has been designated to be entrusted with the power of assessment and collection of service tax in a local area, it should be presumed that no other officer should have jurisdiction to exercise powers of assessment and collection of such tax. It was argued that during the relevant period, the appellant was not liable to payment of service tax as its activities were exempted from payment of service tax under the category of consulting engineer’s service through Notification No. 04/1999-ST dated 28.02.1999. Further referred to CBEC Circular No. 70/19/2003-ST dated 17.12.2003 which clarified that the taxable service provided to any person by a consulting engineer in relation to computer software is exempted, and therefore, activities relating to maintenance of computer software are not taxable. A two member bench comprising Mr S S Garg, Member (Judicial) and Mr P Anjani Kumar, Member (Technical) found that the nature of services as provided in the agreement are in relation to operation, development and facilitation of software and without said services, the usage of software would be redundant. Here, it is relevant to reproduce the observation of the Tribunal in the case of Nokia (India) Pvt. Ltd. cited (supra) to highlight that software engineers job is not only confined to development of software rather they helps in system development and designs, construct, test and maintain computer application software and system and solve technical problems that arise during the working of the software. ln the case of Nokia (India) Pvt. Ltd. it was held that the advisory support service relating to software clearly falls within the domain of the service by a software engineer and accordingly software support services were exempted from payment of service tax under the category of consulting engineer’s service. The CESTAT viewed that during the period in dispute, the activities of the appellant were exempted by Notification No. 04/1999 dated 28.02.1999 and the Circular No. 70/19/2003-ST dated 17.12.2003. When the appellant is not liable to pay service tax, the question of demanding interest and imposing penalty does not arise. The Tribunal set-aside the impugned order by allowing the appeal of the appellant with consequential relief, if any, as per law. Shri Tanuj Hazari appeared for the appellant and Shri Raman Mittal, Authorised Representative appeared for the Respondent. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Relief to Yamaha Motor Solution, No Service Tax payable under consulting engineer’s service for Advisory Support Service: CESTAT [Read Order]

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