Per: AJAY SHARMA

1. This appeal is directed against the Order-in-Appeal dated 10.03.2017 passed by the Commissioner of Service Tax, Audit-I, Mumbai (hereinafter referred to as the "impugned order"), whereby the learned Commissioner (Appeals) confirmed the demand of Service Tax amounting to Rs. 2,73,40,175/- (Rupees Two Crore Seventy-Three Lakhs Forty Thousand One Hundred and Seventy-Five only), with equal penalty under the relevant provisions of the Finance Act, 1994, an additional penalty of Rs. 10,000/-, and interest at the applicable statutory rates.

2. The period in dispute is from 1.8.2005 to 30.4.2006. The Appellant, M/s. Standard Chartered Finance Limited (hereinafter referred to as "the Appellant"), was registered under taxable service categories, namely: Maintenance and Repair Services; Business Auxiliary Services and Real Estate Agent Services.

3. During the course of departmental audit for the period April, 2003 to March, 2007, it came to the notice of the Revenue that the Appellant had neither charged nor paid Service Tax on amounts received by it under the head "Data Processing Fee" prior to May, 2006. The Appellant's explanation, that such services constituted Information Technology (IT) Enabled Services which were expressly excluded from the ambit of "Business Auxiliary Services" until 01.05.2006, was not accepted by the Department. The Revenue took the position that since the Appellant was deploying computer systems to process data pertaining to its clients' business operations, the output of such activity could not be characterised as an IT Enabled Service per se. According to the Department, the use of a computer or IT infrastructure as a tool for processing business-related data does not transform the underlying business activity into an information technology service and reliance was placed upon CBEC Circular No. 62/11/2003 (F.No. B3/7/2003-TRU) dated 21.08.2003.

4. In the course of further inquiry, the Appellant disclosed that, pursuant to a Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956, it had acquired the Domestic Business Division of M/s. Scope International Private Limited, a Chennai-based company. This acquisition came into effect in August 2005, consequent upon the demerger of the said Division from M/s. Scope International. The Appellant also furnished details of the service tax collected and discharged by the said Division in respect of the period prior to the acquisition, i.e., up to July, 2005. Thereafter, the Appellant provided bifurcated billing information for the period August, 2005 to April, 2006, distinguishing between non-IT enabled services (on which Service Tax had been discharged) and IT Enabled Services (on which no Service Tax was paid on account of the applicable statutory exclusion). The Department, however, proceeded on the basis that the Appellant had failed to discharge any Service Tax liability in respect of service charges aggregating Rs. 26,02,90,469/- pertaining to the Domestic Business Division's operations during the period in dispute.

5. A Show-Cause Notice dated 23.10.2009 was accordingly issued to them to show cause why service tax should not be demanded from them on the Data Processing Fees under taxable service category of Business Auxiliary Service u/s. 65(19) ibid, proposing recovery of Service Tax including Education Cess amounting to Rs. 2,73,40,175/- under the proviso to Section 73(1) of the Finance Act, 1994 read with Section 68 thereof and Rule 6 of the Service Tax Rules, 1994, together with interest and penalties under the applicable provisions. After due adjudication, the said Show-cause Notice culminated in the impugned Order-in-Original dated 10.03.2017 confirming the proposed demand, interest and penalties.

6. Learned Counsel for the Appellant submitted that, following the acquisition of the Domestic Business Division of M/s. Scope International in August 2005, the Appellant commenced providing back-end transaction a