ORDER
S.L. Peeran, Member (J)
1. The appellant is required to pre-deposit Rs. 88,66,501/- and imposed various penalties under Section 76, 77 and 78. The appellants have entered into a contract with Government of Andhra Pradesh for supply of certain hardware materials which are used in linking the districts. Along with hardware material they have supplied software also for operating the hardware materials. They had registered themselves under “Maintenance and Repair Services”. However after the department received information that this category is not appropriate, they issued show cause notice to the appellants to bring the activity carried out by them in terms of contract entered into with Government of Andhra Pradesh under the category of “Online Information and Database Access or Retrieval Service”. The appellants produced enormous evidence to show that they were not carrying on any such activity which relates to this category. They denied that their software had the capacity to retrieve data or access to the data or to any online information. Their contention is that Revenue has not controvertered their submissions and technical opinions with any information from any experts. They have not sent their expert’s opinion along with the reply to the show cause notice to any expert body, therefore, the Commissioner’s reading of the contract to hold that they are carrying on the activity under the category listed supra is totally based on his own understanding, which is not scientific and rational.
2. The learned Sr. Counsel took us through the paper-book and tried to demonstrate from the terms of the contract also that they were only giving hardware and the software to operate the network. The network provided is Wide Area Network (WAN) which cannot on any basis be held to come within the category of “Online Information and Database Access or Retrieval Services”. The technical information has not been gone into and therefore, the order is totally non-speaking and not supported by any evidence by Revenue to discharge their burden to bring the activity of the appellant under the category noted supra. He submits that appellants have a very strong prima facie case in their favour and prays for total waiver.
3. The learned SDR would like to call for the report from the Commissioner. In any case, she submits that the terms of the contract indicate that the hardware and software supplied by the appellants are in the nature of retrieving online information and database access, therefore, the finding recorded by the Commissioner in this regard cannot be brushed aside. The appellants have not pleaded any financial hardship and she prays for putting the appellants on terms.
4. We have perused the terms of the contract and also the technical opinion produced by the appellants. The fundamental rule is that Revenue should discharge the burden pertaining to taxability for placing the activity under one head or another. In a case of this type which is highly technical in nature, the Revenue ought to have referred the entire technical information furnished by the appellants to an expert body like National Informatics Centre. The same has not been done. To arrive at conclusion on reading the contract may lead to certain assumption and presumption. It may not be scientific also to brush aside the technical information given by the appellants by making our own reading of the terms of the contract. In view of Revenue not having produced any technical opinion, the appellant’s contention that Revenue has failed to discharge their burden has to be taken into account. At this stage prima facie the appellants have made out a case in their favour, therefore, the stay application is allowed granting waiver of pre-deposit and staying its recovery till the disposal of the appeal. As revenue involvement is more, appeal to come up for final hearing on 22nd November 2007. Commissioner to file his para-wise comments and also reply to this technical literature before the date of final hearing.
(Pronounced and dictated in open Court)