Branded software on physical media qualifies as goods, and the right to use it can be taxed under sales tax law.

Article 366(29A) enlarges the constitutional concept of sale of goods to include transfer of the right to use goods, and the Andhra Pradesh General Sales Tax Act was read as operating within that field. Branded software sold as standard packages on floppies or discs was treated as an identifiable movable commodity and therefore as "goods" under the Act. On that basis, turnover from its sale or from the right to use it was taxable. The reasoning was confined to branded software and distinguished tailor-made or unbranded software.

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Issues: (i) Whether section 2(n) read with Explanation IV and sections 5 and 5-E of the Andhra Pradesh General Sales Tax Act, 1957 were beyond the legislative competence of the State Legislature and ultra vires the Constitution of India. (ii) Whether branded software sold as packages like floppies and discs fell within the meaning of "goods" and whether the turnover from their sale or the right to use them was taxable under the Andhra Pradesh General Sales Tax Act, 1957.

Issue (i): Whether section 2(n) read with Explanation IV and sections 5 and 5-E of the Andhra Pradesh General Sales Tax Act, 1957 were beyond the legislative competence of the State Legislature and ultra vires the Constitution of India.

Analysis: Entry 54 of List II authorises tax on the sale or purchase of goods, and article 366(29A) enlarges that concept to include transfer of the right to use goods. The charging provision and the definitions in the Act, including the deeming fiction for transfer of the right to use any goods, operate within that enlarged constitutional field. The impugned provisions therefore derive support from the constitutional amendment and cannot be said to be outside legislative competence.

Conclusion: The challenge to the validity of section 2(n) read with Explanation IV and sections 5 and 5-E failed; those provisions were held not to be ultra vires.

Issue (ii): Whether branded software sold as packages like floppies and discs fell within the meaning of "goods" and whether the turnover from their sale or the right to use them was taxable under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The definition of "goods" in the Act is wide and covers movable property and identifiable commodities known to the market. Applying that understanding, branded software marketed as standard packages on floppies or discs was treated as a commercially known and identifiable article, distinct from the programmer's labour or skill. Mere characterisation of software as intellectual property did not exclude it from the concept of goods in this statutory setting. The Court distinguished tailor-made or unbranded software and confined its ruling to branded software.

Conclusion: Branded software in the form of floppies and discs was held to be goods, and its sale or the transfer of the right to use it was taxable under the Act.

Final Conclusion: The writ petition and connected tax revision cases were without merit, and the common order of the Sales Tax Appellate Tribunal was sustained.

Ratio Decidendi: For sales tax purposes, branded software marketed as standard packages on physical media is an identifiable movable commodity and constitutes goods, while article 366(29A) authorises taxation of the transfer of the right to use such goods.

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