Authority deems company software as goods, eligible for concessional tax rates

The Authority ruled that the software supplied by the private limited company qualifies as goods and computer software under relevant notifications, making them eligible for concessional tax rates when supplied to specified institutions.

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Issues:
1. Whether software supplied qualifies as Computer software resulting in Supply of goodsRs.
2. Applicability of Notifications No. 45/2017-Central Tax (Rate) and 47/2017-Integrated Tax (Rate) to specific institutions.

Analysis:

Issue 1: Whether software supplied qualifies as Computer software resulting in Supply of goodsRs.
The applicant, a private limited company supplying software, sought an advance ruling on whether the software supplied qualifies as goods. The applicant purchases pre-developed software from a principal partner and resells it to customers, mainly government departments and public institutions. The software is not tailored to individual requirements but is packaged software used across various industries. The applicant argued that the software should be treated as goods based on a Supreme Court ruling that canned software is considered goods for sales tax purposes. During the personal hearing, it was clarified that the software is pre-designed, pre-developed, and controlled through encryption keys. The Authority found that the software sold by the applicant meets the criteria to be considered goods, specifically computer software under HSN 8523.

Issue 2: Applicability of Notifications No. 45/2017-Central Tax (Rate) and 47/2017-Integrated Tax (Rate) to specific institutions
The Authority examined Notification No. 45/2017-Central Tax (Rate) dated 14th November, 2017, which specifies a concessional tax rate for goods supplied to certain institutions. The entry in the notification includes computer software among the goods eligible for the concessional rate subject to specified conditions. The Authority verified that if the software is sold to institutions listed in the notification and meets the conditions, it would be taxed at a reduced rate. The ruling confirmed that the benefits of the notifications apply to the supplies made by the applicant if the recipients are covered under the notification and meet the specified conditions.

In conclusion, the Authority ruled that the software supplied by the applicant qualifies as goods and computer software under the relevant notifications, making them eligible for concessional tax rates when supplied to specified institutions.

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