Liability of service tax and vat - Tds applicability

[Sanjeev Sharma]

if a company imports software in CDs ( with perpetual licenses) from abroad and sells it in local market, what is the service tax and VAT liability on it ? Is there any TDS issue also involved ?

[Vijay Chitte]

Recently the Delhi High court in the case " Samsung lectronics " held that every payment to a non-resident must be subject to deduction of tax at source or else must be pre-authorized/ pre-validated by the Assessing Officer for any concession either for rate deduction or for appropriate value chargeable on an application under Section 195(2). The Supreme Court has temporarily stayed the collection of tax, arising out of the Samsung decision, by the Department from the appellants, who had filed an SLP. We need to wait for the final outcome of the case. Service tax is not applicable in your case, being software is a goods. Vat is applicable.

AI Summary

TDS on payments to non-residents may be required; software sales treated as goods with VAT applicable. Payments to non-residents for imported software on CDs may be subject to Tax Deduction at Source unless the Assessing Officer pre authorizes a concession; a higher court has stayed collection under that decision. For indirect taxes, such software on physical media is treated as goods so service tax does not apply while VAT is applicable on domestic sale.