software services

[sunil mehta]

1) Budget notfn. no.25/2011 dt 01/03/2011  has only given concession to those service providers who imports packaged software ( under ch.85 of 1st.sch. of customs tariff act )and where it is not required to declare 'MRP' on the product.They are exempted from paying ' additional duty of customs' which represents---

--- the price payable for 'transfer of right to use'.In other words  the importer has to pay CVD only--(i)  on portion of value representing value of medium on which it is recorded and ---(ii) on freight & insurance.

 

2)A parallel notfn.no.14/2011--CE dt.01/03/2011  has been issued to give exemption in respect of C.Excise in similar way as explained above.

 

Query:-a)  Whether service tax will be payable after 1/3/2011 on import of  packaged software if importer pays CVD as mentioned above in (1) ? 

           b)  CVD on freight/insurance & CVD on  value of 'media'  will be very small which importer will pay .He will take exemption on CVD payable on 'value for right to use' which forms greater part of import bill.Therefore importer is benefited now?

 

3)The above notfn. has not replaced notification no. 53/2010 ST  dt.21/12/2010 . Service tax notification no.53/2010--ST dt.21/12/11 still exists.It is not rescinded.

Query:- Under what circumstances notfn. no. 53/2010 for import of packaged software will operate after 1/3/11 ?

 

[Rama Krishana]

Your issue is technical one and require more careful deliberation. Being a professional brother, may I request you to put your views with reasons first to this query which may help us to understand the same further.

AI Summary

Import tax treatment for packaged software: CVD limited to media and freight may affect service tax liability on right-to-use. The document explains that recent notifications limit CVD on imported packaged software to the physical medium and freight/insurance, excluding the value attributable to the transfer of right to use, with a corresponding excise exemption; it raises whether paying CVD only on those limited components affects preexisting service tax liability under an unchanged service tax notification and if importers thereby gain a net benefit.