Indusface Consulting Pvt Ltd VERSUS   C.C.E. & S.T.-Vadodara-i

Service Tax Appeal No. 13497 of 2013-DB

 

(Arising out of OIA-VAD-EXCUS-001-APP-305-306-13-14 Dated- 21/08/2013 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I( Appeal))

 

Indusface Consulting Pvt Ltd

VERSUS  

C.C.E. & S.T.-Vadodara-i

WITH

Service Tax Appeal No. 13499 of 2013

 

(Arising out of OIA-VAD-EXCUS-001-APP-305-306-13-14 Dated- 21/08/2013 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I( Appeal))

Indusface Consulting Pvt Ltd Appellant

A/2-3, 3rd Floor, Status Plaza, Opp. Relish Resort, Nr. Hero Honda Show Room, Akshar Chowk, VADODARA, GUJARAT

VERSUS

C.C.E. & S.T.-Vadodara-i Respondent

1st Floor Central Excise Building,

Race Course Circle, Vadodara, Gujarat-390007

APPEARANCE:

Shri. Saurabh Dixit, Advocate for the Appellant

Shri. Rajesh K Agarwal, Superintendent (AR) for the Respondent

 

 

CORAM: HON’BLE MR. RAJU, MEMBER (TECHNICAL)

HON’BLE MR. SOMESH ARORA MEMBER (JUDICIAL)

 

 

Final Order No. A/ 10503-10504 /2023

 

DATE OF HEARING: 13.03.2023 DATE OF DECISION:21.03.2023

 

 

 

 

SOMESH ARORA

 

Briefly stating the facts are the appellant is involved in providing services to M/s Entrust Limited, Canada and on the basis of copyrighted in material providing various types of Secured Socket Layer (SSL) certificate services.

2. The Appellant has filed the present appeal being dissatisfied and aggrieved with Order in Appeal No. VAD-EXCUS-001-APP-305/306-2013-14 dated 21.8.13 passed by the Hon’ble Commissioner (Appeals) of Central Excise, Customs & Service Tax, Vadodara.
3. The matrix of the facts leading to the filing of the present appeal is as follows:-
   • The Appellant is engaged in issuing digital Security certificates,suitable for E-commerce transactions popularly known as SSL certificates.
   • The department demanded Service Tax from the Appellant on the dealings on a species of Digital Signature Certificate, under four different taxable service categories, for different period.
   • SCN17.4.12 came to be issued to the Appellant, that SSL certificate and Digital Certificate are distinct and separate. The impugned order sought to recover Service Tax under different service categories for the very same activity, along with interest and proposed to impose various penalties on the Appellant.
   • The Appellant filed reply to the SCN being reply dated 9.8.12 clarifying the exact nature of SSL certificates, and showing that the same are nothing but digital signature certificates only, which are held to be not subject to Service Tax by the Board, vide its clarification dt.5.6.08.
   • The Appellant filed further written submissions dt.10.9.12, wherein detailed reason were given why the demand is not sustainable.
   • The impugned order, however, came to be passed, confirming the demand of Service Tax along with interest and penalty.
   • Being dissatisfied and aggrieved with OIO dt. 28.1.13, the Appellant preferred an appeal before the appellate authority.

 

• Despite the above the impugned appellate order came to be passed rejecting the appeal of the Appellant and upholding the original order. Therefore, the present appeal.

 

 

4. In short,the appellants plead that they are acting as local authority for M/s Entrust Limited, Canada to do due diligence of various Indian buyers desirous of having SSL certificates or digital signature and that while a digital has been statutorily recognized the SSLS certificate is voluntarily acquired. Appeallants procured orders for issue of SSLS and verified credentials of subscribers for M/s Entrust Limited, Canada suitably. For the services provided appellant collect the amount from Indian customers and retain consideration and the balance amount is passed on to M/s. Entrust Limited. The show cause notice was issue for such remittance abroad (under RCM basis) for different periods, under different service categories as follow:-

 

 

• The appellant plead that the issue is no longer res-integra and has been discussed at length in the order of co-ordinate bench as reported in 2018 (14)GSTL 268 Tribunal Chennai in the matter of Sify Technologies  Vs. Commissioner of Central Excise and Service Tax., LTU, Chennai, with only difference that for the purposes of the present litigation no Digital signature certificate was involved but only SSLS have been issued. The factual matrix in the present case vis-à-vis M/s. Sify can be understood with the following summarized chart:-

 

 

 

 

• The Advocate for appellant also emphasized that the same activity cannot be taxed under different heads for different period and relied upon the following decision to buttress his arguments:-

 

 

• TotalEnvironment Building Systems Ltd.-2022 (63) GSTL 257 (SC)
• L&TLtd-2015 (39) STR 913 (SC)
• CrisilLtd-2017 (48) STR 169 (Tri-Mumbai)
• CrisilLtd-2018 (8) GSTL 16 (Bom.)
• PerfectRelations Ltd-2019 (22) GSTL 88 (Tri-Del)

 

 

 

5. As against this, the learned AR supported the order passed by the learned Commissioner (Appeals) emphasizing that SSL Certification is a much elaborate process in which digital signature certification is only a small part and therefore, the Boards Letter F.No. 137/76/2008-CX4 dated 05.06.2008 which wasin relation to digital signature does not come into play and services provided by them was in the nature of Business Support Services to M/s. Entrust Limited, Canada and for the other periods the services were covered as upheld by the lower authority as IT service as well as Government Supply and Transfer Services in short, he sought confirmation of the Order-In-Appeal.

 

6. We have considered the rival submissions. We find that the in the matterof Sify Technologies Ltd  C.EX. & S.T.,CHENNAI -2018(14) GSTL

268 (Tri.- Chennai) the co-ordinate bench of the Tribunal was confronted with the issue of providing Secured Socket Layer Certification (SSLC) and Digital Signature Certificate being an IT service from 16.05.2008 onward or not and whether the same were Development of Content Service or Business Support Service for the earlier period. After considering the entire gamut of services as well as CBEC clarification bearing F. No. 137/76/2008- CX4 dated 05.06.2008 and F. No. 137/76/2008-CX4 dated 28.07.2008, the bench concluded that the services involved are not taxable services of the nature sought by the department and simply usage of some software by the party in India would not amount to activities coming under the preview of information technology services. Para 7 & 8 of the findings in the Sify case are relevant for the purposes:-

 

 

 

“7. The Office of Controller of Certifying Authorities vide their letter dated 14-8-2008 has informed the appellant that the activity of issuing DSC would not fall under Technical Inspection and Certification Service, Business Auxiliary Service or Business Support Service (BSS). From the detailed explanation of the activity put forward by the Ld. Counsel for appellant, we do not find that any of the steps/processes involved in issuing DSC would fall within the definition of Information Technology Services. Further, the software is owned by M/s. Verisign, USA and appellants have obtained only right to use the software. Therefore their activity does not involve any development of software. In fact appellants make use of the software already developed by M/s. Verisign and generate digital certificates. This is nothing but use of software just like use of windows software, etc.

 

8. In para 6.3 of the Impugned Order, even the Commissioner has held that the process of issue of DSC and that of SSLC is akin to each other, the only difference being in SSLC, the certification is voluntary,whereas the issue of DSC is recognized by statute, Information Technology Act, 2000. The appellant issues DSC as per license issuedto them by Controller of Certifying Authorities. Appellants have to follow the procedures prescribed under the Information Technology Act, 2000. Thus the activity of issuing DSC is statut only recognized. The department vide letter dated 28-7-2008 has clarified that if the issuance of DSC does not involve development of IT Software, adoption or adaptation service related to IT software or certification of IT Software, the activity would not fall under Information Technology Services. When the process of issue of both these certificates are akin to each other, merely because SSLC is issued under voluntary requirement of the customer the same cannot be classified under Information Technology Services”.

 

 

 

• We find that the Sify Order extensively covers the rejection of the activities for service tax under the heads purposed by the department in the instant case also, and even for the same periods.

 

7. In view of the foregoing, we find that the ratio of the decision in the matter of Sify can safely be applied to the facts of this case and activities of

 

the appellants are not covered under various heads proposed by the department. Appeals are therefore allowed with consequential relief.

 

(Pronounced in the open court on 21.03.2023)

 

 

 

(RAJU) MEMBER (TECHNICAL)

 

 

PRACHI

(SOMESH ARORA) MEMBER (JUDICIAL)