Double taxation on software paper licenses

[Veet Voojajig]

Hi, I own/run a company that provides IT solutions & services to small businesses & start-ups.. We also resell Hardware equipment, and Software (Microsoft, Adobe, etc) licenses.. For hardware, packaged software, services, the taxation is pretty straight-forward. However, I am not aware on what to do, in case of Software paper licenses, that attract double-taxation (Service Tax & VAT)...Let me explain ...

I have two companies (For the sake of billing)

1. iRave Tech - Partnership. This was the first company. This company has a Service Tax number ONLY. When we started off, we were providing on services, and not reselling any hardware equipment ..
2. iRave Tech - Sole proprietorship - This company was started around 2 years back, because I wanted to start reselling hardware equipment. This company has ONLY a VAT number, and NO Service Tax Number ... I was told to do it this way, by my (ex)accountant ...

Both companies have different bank accounts ... For most parts, everything is fine.. But, the issue arises when I have to charge Service Tax & VAT... I need to bifurcate the payment received for Service Tax & VAT, and I cannot seem to figure out how .. I was going by my (ex)accountant's suggestion, and am currently, losing the VAT set-off.

I would much appreciate any suggestions/advise on how to do the billing & receive payment, for the above scenario ..

AI Summary

Individual Faces Double Taxation on Software Licenses; Clarification Sought Under Section 65(105)(zzzze) of Finance Act. An individual operating two companies, one a partnership with a Service Tax number and the other a sole proprietorship with a VAT number, is facing challenges with double taxation on software paper licenses. The issue arises from the need to bifurcate payments for Service Tax and VAT, which is complicated by the lack of a clear method for doing so. Suggestions from forum participants include consulting Section 65(105)(zzzze) of the Finance Act, understanding the nature of software transactions under VAT and service tax, and reviewing relevant advance rulings for guidance.