The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that service tax is not leviable on services like software development.
Verve Consulting Private Limited, the appellant assessee was engaged in providing services as a Management Consultant, and the assessee appealed against the order passed by the Commissioner for confirming the demand of service tax along with interest and penalty.
Shreya Mundhra, the counsel for the assessee contended that the services rendered in the field of deployment of staff, software development, repair and maintenance, and public relation, etc cannot be taxed under the category of management consultancy services, and the development of the mobile team, software development, repair, and maintenance, and providing public relation service, etc. does not come within the ambit and scope of management consultancy service.
S.S.Chattopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the demand of service tax raised by the department was as per the law and liable to be sustained.
The Bench observed that a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, training supervision in addition to management consulting and these activities are not liable to be classified under ‘Management Consultancy Service’ and the impugned order had classified the entire activity under management consultancy and demanded service tax.
The two-member bench comprising Ashok Jindal( Judicial) and K.Anpazhakan (Technical) held that the service rendered like software development provided by the assessee was exempted from payment of Service tax in terms of Notification and no service tax was payable on the amount received towards software development.
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