TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether software imported in Compact Disc (CD) form is leviable to service tax; (ii) Whether electronically downloaded software imported under high sea sales is liable to service tax as import of services under Section 66/66A and the Taxation of Services (Provided from outside India and received in India) Rules, 2006; (iii) Whether software received prior to 16.05.2008 is taxable where payments were made after 16.05.2008; (iv) Whether invocation of the extended period of limitation for assessment of service tax on electronically downloaded software imported under high sea sales is justified.
Issue (i): Whether software imported in Compact Disc (CD) form is leviable to service tax.
Analysis: The Tribunal examined the nature of compact discs containing software and applied the goods-versus-services tests previously laid down by the Supreme Court. The record showed specific instances of CDs imported and the settled law treating recorded software on physical media as goods was applied.
Conclusion: The demand of service tax on software imported in Compact Disc form is set aside in favour of the assessee.
Issue (ii): Whether electronically downloaded software imported under high sea sales is liable to service tax as import of services under Section 66/66A and the Taxation of Services (Provided from outside India and received in India) Rules, 2006.
Analysis: The Tribunal considered the contractual and transactional facts showing that foreign suppliers developed and licensed the software and that the appellant filed bills of entry and paid customs duties, establishing import. Section 66/66A and the Rules governing import of services were applied to determine liability for services provided from abroad and received in India. The Tribunal also reviewed the Commissioner's findings that the foreign entities retained the characteristics of service providers and supplied rights to use software as per specifications.
Conclusion: The demand of service tax on electronically downloaded software imported under high sea sales for the period 16.05.2008 to 31.03.2010 is confirmed against the assessee.
Issue (iii): Whether software received prior to 16.05.2008 is taxable where payments were made after 16.05.2008.
Analysis: The Tribunal examined purchase orders, payment schedules and precedents holding that the taxable event for service tax is the rendering/receipt of the taxable service. Where the service was rendered prior to the date on which the relevant service became taxable, subsequent invoicing or payment does not create liability. The facts showed receipt of certain software prior to 16.05.2008 and a multi-year payment schedule consistent with earlier delivery/receipt.
Conclusion: The demand of service tax for software received prior to 16.05.2008 is set aside in favour of the assessee.
Issue (iv): Whether invocation of the extended period of limitation for assessment of service tax on electronically downloaded software imported under high sea sales is justified.
Analysis: The Tribunal considered the date and content of the show-cause notice and the appellant's replies showing that the appellant had discharged service tax on certain imports for the relevant period and was aware of potential liability. The Tribunal applied limitation principles to the facts and evidence of knowledge and non-payment to assess whether extended period invocation was warranted.
Conclusion: Invocation of the extended period of limitation for the demand on electronically downloaded software imported under high sea sales is justified and the demand for the period 16.05.2008 to 31.03.2010 is sustained.
Final Conclusion: The appeal is partly allowed by setting aside the service tax demand (and penalty) relating to software imported on Compact Disc and software received prior to 16.05.2008, and by confirming the service tax demand (with remand for redetermination of tax, interest and penalty) on electronically downloaded software imported under high sea sales for the period 16.05.2008 to 31.03.2010.
Ratio Decidendi: Software supplied on physical media (compact disc) constitutes goods and is not liable to service tax; electronically supplied/licensed software imported from abroad constitutes import of services under Section 66/66A and the Taxation of Services (Provided from outside India and received in India) Rules, 2006 and is taxable where the taxable event (rendering/receipt) occurs on or after the date the service became taxable; subsequent invoicing or payment after the taxable date does not create tax liability for services whose taxable event occurred prior to the levy becoming effective.
TaxTMI 
TaxTMI 
