Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-04-01-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 04 January 2023
Parties: Black Box Limited Vs Commissioner of Central Excise & ST, Ahmedabad-iii
Facts –
- The Appellant, Black Box Limited was dealing in Electronic and Telecom equipment. The appellant has shown certain amount as “Software Activation” income in Schedule 14. They had collected these charges from their customers in connection with after sales of goods i.e equipment/ software.
- The appellant were issued three show cause notices as to why the activity of selling of software should not be treated as taxable services under the category of “Business Auxiliary Services” under Section 65 of the Finance Act, 1994 and the Service tax should not be demanded under Section 73(1) of the Act along with interest.
Issues –
- Whether the appellant is liable to pay Service tax on “Software Activation Charges” under the taxable services of “Business Auxiliary Services”?
Order –
- The Tribunal held that there is no service obligation in whole transaction. The only commercial obligation is sale of goods by appellant to customers as and when required. The appellant did not receive any commission in this matter. The appellant is not a facilitator or a service provider to customers, but is a seller to customers.
- It is clear that the amount collected by the Appellant from their customers against as “activation charges” of equipment/ software features are covered under the activity of sales of goods and not covered under the provisions of “Service” as defined in the Act.
- The Tribunal observed that the appellant admittedly paid the Sales Tax/ VAT duty on the entire transaction and also issued invoice/bills to customer for the above disputed transactions. Therefore, the entire activity of appellant is very much on record. Appellant also disclosed the said transaction in their Balance Sheet. Accordingly, no suppression or mis-declaration can be attributed to the appellant for invoking extended period of demand.
- Hence the appeal is allowed.
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