‘Software Maintenance Services’ are Outside the ambit of BAS till 2007 Amendment: CESTAT [Read Order]

Software Maintenance Services- ambit of BAS -2007 Amendment- CESTAT - Taxscan

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the software maintenance services shall not be covered within the definition of “Business Auxiliary Services” under the Finance Act, 1994.

The appellants are providing ‘Management, Maintenance or Repair Service and Information Technology Software Service’. The department, during audit found that the appellants received an amount of Rs.6320.52 lakhs towards the services rendered under maintenance and repair of software service for the period 9.7.2004 to 30.11.2005 and such service were liable to service tax from 1.7.2003.

Relying on the precedents, CESTAT bench comprising Technical Member Mr. P Anjani Kumar and Judicial Member P Dinesha observed that till the advent of the Finance Act, 2007, the information technology which included maintenance of computer software, had been outside the purview of ‘business auxiliary service’, especially under Section 65 and the term, ‘goods’ in the Finance Act, 2007 has included ‘computer software’ under section 65(105)(zzg).

“However, under the impugned circular the second respondent placed reliance on the judgment of the Supreme Court in Tata Consultancy Service v. State of Andhra Pradesh [(2005) 1 SCC 308] to conclude that software being goods, any service relating to maintenance, repairing and servicing of the same is also liable for service tax,” the bench said.

“In view of the same, we find that the issue is no longer res integra and we hold that the appellants are not required to service tax on software maintenance services during the period July 9, 2004 to November 30, 2005.”

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