M/S. Info Softdata Services Private Limited Vs. Commissioner of Central Excise and Service Tax, Ranchi - Court Judgment

Dr. D.M. Misra, J.

1. This is an Application seeking waiver of predeposit of Service Tax of Rs.14.98 lakh and penalty of Rs.15.00 lakh imposed under Section 78, and penalty of Rs.5,000/- under Section 77 of the Finance Act, 1994.

2. At the outset, ld. Authorized Representative for the Applicant submits that the ld. Commissioner (Appeals) has not decided the issue on merit, but dismissed their appeal for non-compliance with the direction of predeposit. He submits that they have worked as a sub-contractor for M/s. RITES Ltd. and the Principal Contractor have discharged the service tax for rendering the services under the category of Supply of Tangible Goods against the Work Order issued by the Inspector General of Jails, Government of Bihar. It is the submission of the ld. Authorized Representative that they have installed their own computers etc. at various jails, without transferring the right of possession and effective control on the said computers. The purpose of establishing the computer centers at various jails, is to upkeep records/data and strengthen the communication system of different jails; the system established at the computer centers by the Applicant is readily available for use by Jail Authorities. Hence, it cannot be construed as Supply of Tangible Goods for use Service.

3. Ld. AR for the Revenue fairly accepts that the issue has not been decided on merit, but the ld. Commissioner has dismissed the appeal before him for non-compliance with the provisions of Section 35F of the Central Excise Act, 1944, as applicable to Service Tax cases. He has no objection in remanding the matter for deciding the issue afresh.

4. After hearing both sides for some time, we find that the Appeal itself could be disposed of, at this stage. Accordingly, after waiving the requirement of predeposit, we take up the Appeal itself for disposal with the consent of both sides.

5. We find that the issue involved in the present case relates to the services rendered by the Applicant to the Inspector General of Jails, Government of Bihar, against the work order issued by the said Authority. It is the claim of the Appellant that even though they have established computer centers at various jails, they retained the ownership of the said computers and thus, the services would not come under the scope of Supply of Tangible Goods for Use Service. We find that the issue is debatable and needs detailed scrutiny of the evidences adduced by the Appellant, and the provisions of law. In the result, we feel it is proper to remit the matter to the ld. Commissioner (Appeals) to decide the issues afresh, without insisting any predeposit. Consequently, we set aside the impugned Order and remand the matter to the ld. Commissioner for deciding the issue on merit. Needless to mention that a reasonable opportunity of hearing be afforded to the Appellant. All issues are kept open. Both sides are at liberty to place evidences. Appeal is allowed by way of remand. SP disposed.