IMPORTANT POINTS
(1) Sale of goods – Transfer of right is sine qua non for right to use any goods, and such transfer takes place when contract is executed under which right is vested in lessee.
(2) Service Tax on sale of goods – Contract cannot be vivisected or split into two – Once a lump sum has been charged for sale of CD and sale tax has been paid thereon, Revenue thereafter cannot levy service tax on entire sale consideration once again on the ground that updates are being provided.

JUDGMENT :

J.B. Pardiwala, J.

1. Since the issues raised in both the captioned cases are the same, those were taken up for hearing analogously and are being disposed of by this common judgment.

Civil Appeal (Diary No. 24399 of 2020)

2. Delay condoned.

3. This appeal under Section 35L(b) of the Central Excise Act, 1944 (for short, ‘the Act 1944’), as made applicable to the service tax by Section 83 of Chapter V of the Finance Act, 1994 (for short, ‘the Act 1994’), is at the instance of the revenue and is directed against the order No. 50022/2020 dated 09.01.2020 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short, ‘the Tribunal’) in the Service Tax Appeal No. 51175 of 2016 by which the Tribunal allowed the appeal filed by the respondent herein (assessee) thereby set aside the Order in Original dated 28.01.2016 passed by the Additional Director General (Adjudication) DGCEI, Delhi.

FACTUAL MATRIX

4. For the sake of convenience, the appellant herein shall be referred to as the “revenue” and the respondent herein shall be referred to as the “assessee”.

5. The assessee is registered with the Service Tax Commissioner, Pune-III for providing taxable services, inter alia, under the category of “Information Technology Software Service”. The assessee is engaged in the development of Quick Heal brand Antivirus Software which is supplied along with the license code/product code either online or on the replicated CDs/DVDs to the end-customers in India.

6. It appears from the materials on record that it came to the notice of the Directorate General of Central Excise Intelligence (Headquarters) that the assessee engaged in the development of Quick Heal brand Antivirus Software had not been paying service tax prior to 01.07.2012 on the services covered under the category of “Information Technology Software Service” falling under Item No. (vi) of clause (zzzze) of sub-section (105) of Section 65 of the Act 1994 w.e.f 01.07.2012 on the services covered under the category of “Information Technology Software Service” under Section 66E(d) of the Act 1994 for providing Quick Heal brand Antivirus Software license key/code supplied along with the CD/DVD replicated with the Quick Heal brand Antivirus Software through the dealers/distributors to the end-customers in India.

7. In the aforesaid context, an inquiry was initiated against the assessee and at the end of the same, the revenue reached to the conclusion that the assessee is liable to pay service tax on the transactions with the end-customers to supply the license codes/keys of Quick Heal brand Antivirus Software in the retail packs. The revenue reached to the conclusion that the assessee had failed to pay the service tax on the consideration received for the supply of the license codes/keys of Antivirus Software to the end-customers in retail packs during the period between 01.03.2011 and 31.03.2014.

8. In such circumstances referred to above, a show cause notice dated 02.02.2015 came to be issued to the assessee by the Additional Director General, DGCEI (Hqrs.), New Delhi proposing a demand/recovery of service tax amounting to Rs. 62,73,05,953.36p. (Rupees Sixty Two Crore Seventy Three Lakh Five Thousand Nine Hundred Three and paise Thirty Six Only) on the taxable value of Rs. 5,30,94,66,783/- (Rupees Five Arab Thirty Crore Ninety Four Lakh Sixty Six Thousand Seven Hundred Eighty Three Only) for supplying Quick Heal Antivirus Software replicated CDs/DVDs in the retail packs (i.e. Information Technology Software Service) through its dealers/distributors to the end-customers in India for the period between 01.03.2011 and 31.03.2014 under the proviso to Section 73(1) of the Act 1994 by invoking the extended period of limitation with interest and penalty.

9. The show cause notice referred to above was adjudicated by the Additional Director General (Adjudication), DGCEI, Delhi, who, in turn, confirmed the demand of service tax amount to Rs. 56,07,05,595/- (Rupees Fifty Six Cr