24 October 2009
Dear Rohit, The answer depends on what kind of software it is. If the s/w is generalized i.e. over the shelf s/w eg Windows or tally etc then as per SC decision in TCS it is regarded as goods and only VAT is payable on it. If it is customised then the transaction involves goods plus services then it becomes a works contract hence VAT is applicable on goods portion. So far as applicability of ST on Works contract is concerned the SC has categorically stated that GOI does not have the power to segregate Service element in Works Contract to levy Service tax in BSNL case, however still GOI has introduced WCS in Finance Act. Till date I have not heard if anybody has challenged the enactment. Therefore if your client desires he can challenge it or pay ST as per provisions of WCS
CAclubindia
