15 April 2009
if you are saleing software then no service tax on sale vat applcable. if you are repairing or maintenence then service tax applicable. Circular No. 81/2/2005-ST 7 th October 2005
F.NO.354/132/2005-TRU Government of India Ministry of Finance Department of Revenue Tax Research Unit
Sub: Leviability of service tax on maintenance or repair of software.
Board has examined the leviability of service tax on maintenance or repair or servicing of software under section 65(105)(zzg) read with section 65 (64) of the Finance Act , 1994.
2. Supreme Court in the case of Tata Consultancy Services vs State of Andhra Pradesh (Civil Appeal no 2582 0f 1998) has observed that all the tests required to satisfy the definition of goods are possible in the case of software and in computer software the intellectual property has been incorporated on media for the purpose of transfer and software and media cannot be split up. Therefore, sale of computer software falls within the scope of sale of goods. Supreme Court has also observed that they are in agreement with the view that there is no distinction between branded and unbranded software.
3. Branded software, also known as canned software, sold off the shelf, is transferred in a media and is sold as such and the Supreme Court has decided that such branded software falls within the definition of goods. In the case of unbranded / customized software, the supplier develops the software and thereafter transfers the software so developed in a media and it is taken to the customer’s premises for loading in their system. Thus, in the case of unbranded / customized software also, the intellectual property namely software is incorporated in a media for use. Supreme Court has held that software in a media is goods.
4. Any service provided to a customer by any person in relation to maintenance or repair is leviable to service tax under section 65(105) (zzg) of the Finance act , 1994. “Maintenance or repair” is defined under section 65(64) of the said Act. Accordingly, “maintenance or repair” means any service provided in relation to maintenance or repair or servicing of any goods or equipment.
5 Software, being goods, any service in relation to maintenance or repair or servicing of software is leviable to service tax under section 65(105)(zzg) read with section 65 (64) of the Finance Act, 1994.
6 These instructions are issued taking into account the said decision of the Supreme Court , and in supersession of all earlier clarifications / circulars issued on the above subject.
7. Field formations may be suitably informed.
8. Trade notice may be issued for information of the trade.
9. The receipt of this circular may kindly be acknowledged.
15 April 2009
the assessee provides consultancy w.r.t software development and performs quality validations and testing techniques. In this case is he assesssable under service tax under the new service - "Services provided in relation to information technology software for use in the course or furtherance of business or commerce." & "tecnical testing & analysis"
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