No Service Tax Demanded for Information Technology and Software Services: CESTAT deletes Penalty for Short Payment of Service Tax

The Kolkata bench of CESTAT ruled in favor of the appellant, Ford India, by deleting penalties for short payment of service tax. It clarified that no service tax applies to IT and software services. The appellant, registered as a service provider in broadcasting services, had a dispute regarding reimbursement under an agreement with MSM Asia. Initially, a Show Cause Notice demanded service tax under 'Information Technology Software Services', but the adjudicating authority broadened it to include reverse charge mechanism for declared services. CESTAT found this beyond the notice's scope, citing legal precedents. It concluded that the appellant had no mala fide intention in service tax payment, thus no penalty was justified. The decision highlights precise categorization in tax demands and adherence to Show Cause Notice scopes.