KASTURI AND SONS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The writ petition is for declaration to declare the circular dated October 7, 2005 issued by the second Respondent, the Central Board of Excise and Customs, as ultra vires Section 83 of the Finance Act, 1994 read with Sections 37B and 65(19) of the Central Excise Act, 1944 and is in violation of Articles 14, 19(1)(g) and 265 of the Constitution of India insofar it relates to the Plaintiff.

(2.) The Plaintiff which is engaged in the business of publishing newspapers and periodicals had entered into a contract on October 31, 2000 with CCI Europe A/S Denmark for the supply of software for pagination system. That apart, an agreement for maintenance of software was also entered, by which the Plaintiff paid DKK 2,209,690 equivalent to Indian rupees 1 66 crores (approximately)

(3.) In the counter affidavit filed by the Respondents, it is stated that the services done by outsourcing agencies are to be treated as business auxiliary service as defined under Section 65(19) of the Finance Act, 1994 as substituted by the Finance (No 2) Act, 2004 and the definition "information technology service" includes computer software, system networking, data processing, etc, after the amendment effected in the Finance Act, 2006 and after May 1, 2006 only the services relating to designing or developing of computer software or system networking or computerised data processing or any other services primarily in relation to operation of computer systems are excluded and therefore, it does not mean that it is not taxable under maintenance or repair service Therefore, according to the Respondents, the maintenance branch of information technology was brought into the purview of service tax structure by the amendment made to Section 65(19) by Explanation (b) in Finance Act, 2004.