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Created by : Anandi , Deputy Manager - Finance, Mercedes-Benz Research and Development India  | 01 10 2011 08:17:22 +0000
Activity:  8277 views;  last activity : 01 10 2011 08:17:23 +0000
 
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Either VAT or Service Tax is applicable on Sale of Software Vs both VAT / CST and Service Tax on Sale of Software
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Packaged Software is considered as goods by the Supreme Court of India in the case of Tata Consultancy vs. The State of Andhra Pradesh (“TCS Judgment”) Supreme Court has observed that software would become goods provided it has the attributes of - “(a) utility (b) being capable of being bought and sold and (c) being capable of being transmitted, transferred, delivered, stored and possessed”. “Goods” has been defined under VAT/CST as - all kinds of movable property “Sale” has been defined under VAT/CST to mean : every transfer of property in goods and includes - transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. Accordingly, sale (licensing) of software is leviable to VAT for local sales However, w.e.f May 16, 2008 service tax is leviable on acquiring the right to use information technology software supplied electronically and software supplied for commercial exploitation. Post introduction of ITSS, there is dual levy (i.e. VAT/CST and Service Tax) on a single aspect of a commercial transaction (i.e. on transfer of property in goods and on acquiring the right to use information technology software) . Packaged Software has been considered as goods under Service Tax Circular D.O.F. No. 334/1/2008-TRU dated 29.02.2008 and accordingly, it can be inferred that the sale of packaged software cannot be treated as service.
By Anandi , Deputy Manager - Finance, Mercedes-Benz Research and Development India  | 01 10 2011 08:17:22 +0000
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