Service Tax on Software Keys Distributors

[Akash Shinghal]

Dear All,

The company is an importer distributor of license keys of software which subsequently exports or sells in the domestic market the license keys to the end user without any modification. Whether the same is liable to Service Tax?

The case is typically of a distributor who is not using the software license for its own purposes.

Regards,

Madhav Kalani

[YAGAY andSUN]

Dear Akash/Madhav,

Supply of PKC and WAU are "service" as held by the Hon‟ble Supreme Court in Idea Mobile Communications Ltd. Vs. CCE &C, Cochin, C.A.No. 6319/2011 = 2011 (8) TMI 3 - SUPREME COURT OF INDIA and accordingly, liable to service tax. Similarly, domestic supply of CALs is incidental to the rendering of telecommunications service as held in the same case i.e. Idea Mobile Communications Ltd Vs CCE& C, Cochin. It would accordingly be liable service tax.

Also refer Ruling No. AAR/ ST/ 04/2013 In Application No. AAR/44/ST/09/2012 Applicant : M/s Microsoft Corporation (India) Private Ltd. = 2013 (9) TMI 110 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI

Regards,

Team YAGAY & SUN,

Management & Indirect Tax Consultants

 

[Madhukar N Hiregange]

The mode of import is important as well as the terms of the selling for determining VAT/ ST liability.

If one is an intermediary then if ST is payable on downloads then on further sale aslo ST can be charged. VAT also may have to be charged.

AI Summary

Software License Key Sales: Supreme Court Ruling Suggests Service Tax Applies; VAT Depends on Import Mode and Sales Terms. A company importing and distributing software license keys, which it sells domestically or exports without modification, inquired about service tax liability. One response referenced a Supreme Court ruling, indicating such supplies are considered a 'service' and thus subject to service tax. Additionally, domestic supply of certain licenses is also liable for service tax. Another reply emphasized the importance of the import mode and sales terms in determining VAT and service tax obligations, suggesting that if service tax applies to downloads, it might also apply to subsequent sales, with VAT potentially applicable as well.