Vivek Angrish (Manager Finance & Accounts) (232 Points)
20 March 2010Hey All,
One of my client has make CD for learning of diamond certification course in connection to aggrement with a foreign company and provided those CD's to that Foreign company.
Now i want to know whether this service is covered under service tax act or not? and if covered then under which clause
Kindly help me on this issue. Your valuable comments will be appreciated.
Thank you in advance.
Chintan Vasa
(CA Final Student M.Com)
(1241 Points)
Replied 20 March 2010
As per my opinion, prima facie it seems to be categorized under Information Technology Software Service.
Section 65 (105) (zzzze) of the Finance Act, 1994 provides:
“taxable service” means any service provided 78a[or to be provided], to any person, by any other person in relation to information technology software for use in the course, or furtherance, of business or commerce, including,—
(i) development of information technology software,
(ii) study, analysis, design and programming of information technology software,
(iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software,
(iv) providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the start-up phase of a new system, specifications to secure a database, advice on proprietary information technology software,
(v) [providing] the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products,
(vi) [providing] the right to use information technology software supplied electronically;
Section 65 (53a) defines “information technology software” as under:
“information technology software” means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment;]
Solution 1:
Please refer the lines highlighted with yellow. If data so provided in the CD is not capable of being manipulated or not providing interactivity then it shall move out the service tax net.
Solution 2:
Even if it is considered as taxable service then as per your query your client is sending those CDs to foreign company. Hence it is considered as export of service & there is no mandatory requirement to levy service tax on such exports. In fact the input credit can be claimed for refund.
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 20 March 2010
So, does it mean that export of services are not leivable to service tax. Am I right?
Chintan Vasa
(CA Final Student M.Com)
(1241 Points)
Replied 20 March 2010
No its not like that. Levying service tax on exports is optional. U may or may not levy service tax on export of service.However in your case its not advisable to levy service tax.
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