08 June 2010
What is the definition of packaged or canned software under service tax Act i.e. Finance Act 1994? Vide notification 02/2010 - ST dated 27-02-2010 "packaged or canned software, intended for single use" and packed accordingly is exempted from service tax. Does it cover softrware supplied by digital delivery i.e. software is electronically transmitted?
08 June 2010
Packaged s/w is physical form CD etc. This would be liable for central excise if manufactured in India or cusotms when imported. That is the reason why the same is excluded as a service. As of now downloading of s/w could fall under provding the right to use IT s/w for commercial exploitation and liable for ST. The same transaction is also liable for VAT under the laws of the state. It has also been held to be valid by SC in TCS case. In my view the TCS case is valid and the levy of Servic etax is invalid. However this would have to be decided by the courts.
09 June 2010
Thank you Mr Hiregange for a prompt explanation. To add to my query further, I wish to know if I can take benefit of notifications 02/2010 -ST dtd 27/02/2010 & 17/2010-ST dtd 27/02/2010 which exempts taxable service under item (v) of clause (zzzze) of ss 105 of sec 65 subject to conditions mentioned in respective notifications. Also refer to Department's clarification on Information Technology Software Service (Ministry's Circular/Letter D.O.F. No 334/1/2008-TRU dated 29-02-2008 Quote " Software and upgrades of software are also supplied electronically, known as digital delivery. Taxation is to be neutral and should not depend on forms of delivery. Such supply of IT software electronically shall be covered within the scope of the proposed service. Unquote. which indicates, as I interprete that softwares delivered digitally i.e electronically, should also be eligible for exemption for the sake of equity and as mentioned in above quote to be tax neutral. Can I have your thoughts on the same
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