MAVERIC SYSTEMS LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) IN the impugned order, learned Commissioner has demanded service tax of over Rs. 1.05 crores from the appellants in respect of two services viz. 'Manpower Recruitment or Supply Agency's Service' and 'Technical Testing and Analysis Services', for the periods 16.06.2005 to 31.03.2006 and 01.07.2003 to 31.03.2006 respectively, in adjudication of a show -cause notice dated 02.02.2007, by invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994. He has also appropriated an amount of Rs. 5 lakhs already paid by the assessee, towards the said demand. He has also imposed penalties to talling to over Rs. 1 crore on the assessee. The present application seeks waiver of predeposit and stay of recovery in respect of the balance amount of service tax as also in respect of the penalties.

(2.) AFTER examining the records and hearing both sides, we note that the appellants were engaged in the activity of software verification and validation and technical writing services during the relevant period. In some cases, they undertook this activity under bipartite agreements with software developers like Infosys, i -Flex Solutions, Polaris etc. In some of these cases, the activity was performed at the software developers' sites and, in the remaining cases, it was performed from the assessees' own premises. There were also cases in which the above activity was performed under tripartite agreements between the assessee, software developers and the former's clients like banks and financial service companies like GE Financial Services. In a few cases, standard software was customised. These activities were covered by demand of service tax amounting to over Rs. 95 lakhs. The rest of the demand is on 'Manpower Supply Service'. In this case, the demand is on the amount collected by the assessee from customers under bipartite agreements wherein it was provided that the consideration for the service to the customer be paid in terms of manpower. In this case also, manpower was supplied by the assessee for the above activity. The demand on this count is amounting to over Rs. 10 lakhs.

(3.) THE case of the Revenue in relation to the main service is that software ate 'goods' for the purpose of levy of service tax with effect from 01.07.2003 in terms of the apex court's judgment in the case of