It is a conflicting issue between central authorities and state authorities. There is not much clarity on it, tats y this double taxation is going on... Anyway read this :
The issue is arising bcz of classifying into branded and unbranded softwares.. Department clarification says that unbranded or customised softwares are to be treated as service and service tax should be levied theron. On the other side branded softwares r to be treated as goods and VAT be charged theron( TCS vs. state of Andhra pradesh).
So if we assume that it is unbranded software, it will be subjected to ST. Also as per notification 12/2003-ST,dated 20/06/2003 ..permits deduction of value of material sold from the value of taxable service to get ST liability. Now wen state Govt. treats it as goods for unbranded software, ST liability will not arise as per the above notification... How??? suppose unbranded software charges Rs 1lakh, it can be deducted by the same amount as deduction fr value of material sold as per notification no12/2003-ST,dated 20/06/2003. Hence, there will be no ST liablity bcz value of taxable service will become nil acrdng to the above notification. Only VAt will be attracted..
Hope u got it,, To conclude double taxation cant happen if there is clarity of the provisions among authorities...
If u hv nt understood anything, u can ask me again.
CAclubindia
