By TIOL News Service

NEW DELHI, JUNE 26, 2013: THE first count of service tax demand of Rs. 2,95,63,317/- is under the category of "Business Auxiliary Service". Second count of demand is under category of "Management, Maintenance or Repair Service".

The appellant submitted that a reading of Para 2.5 of show cause notice does not indicate nature of service provided to be "Business Auxiliary Service" for the reason that access code number was provided by the appellant to reach to the source of information to serve their purpose. According to the appellant, there was no service provided by appellant to be taxable because real service was provided by other service provider on use of contact code by service seeker. On the second count of demand it was submitted that when software were not goods prior to 1.6.2007, management, maintenance or repair thereof shall not be liable to service tax for the period up to 31.5.2007.

The Revenue representative submitted that insofar as first count of service tax demand is concerned, the authority explained its mind in Para 19.2 of adjudication order; that anything advanced to achieve a common object of both is nothing but "Business Auxiliary Service". Therefore, ultimate service provider being benefited by its aiding or assisting agent shall bring the later to a category of Business Auxiliary service provider. The demand on the second count was also justified by the adjudicating authority in para 20.3, submitted the representative.

The Bench held -

"7. We can say at the outset that show cause notice should not be read with hyper technicality. What that is intended by the subject, language and object of the show cause notice shall be understood in such manner that the said notice seeks to achieve. Apex Court in the case of CCE, Calcutta vs. Pradyumna Steel Ltd. - 1996 (82) ELT 441 (S.C.) has guided to understand that core of the show cause notice is to be understood without a superficial or a hyper technical reading thereof. On reading of show the cause notice in the present case, we are satisfied that the appellant was an intermediary serving its client who was ultimate service provider to achieve the common object of each other service seeker by the prescribed code i.e. 5888/8888. The appellant advanced the object of its client service provider giving source of information to the ultimate user through code number. Appellant's role was to connect the user of service with the provider to fulfil the object of each other consuming the service provided. We do not find any frustration of the contract by the parties in this case but fulfilment of object of the contract is patent. The appellant being in triangular shape could bring the provider and user to the tax net and incurred liability assisting the provider to connect the user of the service.

8. It is also undisputed fact that the appellant was remunerated satisfying the need of the destination based consumption tax which is the theory propounded by Apex Court in the case of All India Federation of tax practitioners vs. UOI (2007-TIOL-149-SC-ST). Considering that the Revenue shall be prejudiced, if no pre-deposit is called for, we direct the appellant to deposit Rs. 1.5 crore in five equal monthly instalments of Rs. 30 lakhs each by 25th of each months starting from March, 2013, and produce copy of challan within a week of deposit to the learned adjudicating authority to satisfy him that the above order is carried out. Failure to make compliance to this order defaulting to deposit any of the instalments shall render this order vacated…."

The appellant is Times Internet Ltd.

(See 2013-TIOL-965-CESTAT-DEL)