TaxTMI 
TaxTMI 
1995 (11) TMI 221
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....s. 60.17 lacs approximately, the appellant is entitled to the relief claimed by it, even on the finding recorded by the Tribunal in respect of the amount relating to System Software. At this stage the relief claimed by the appellant is confined only the amount which relates the Application Software. Learned Addl. Solicitor General submits that this stand taken by the appellant was not taken in this manner before the Tribunal, and, therefore, the Tribunal had no occasion to examine matter from this angle. We do not think, this objection can be sustained. In our view the submission now made on behalf of the appellant is confined to a part of the whole relief claimed by the appellant earlier. The earlier stand of the appellant was that the appellant was entitled to the benefit for the entire amount. As against that claim, the relief is now confined to part of the claim only. There is no reason why this can be treated as a new case on behalf of the appellant, since it forms a part of the relief which had been claimed all along by the appellant. We are, therefore, of the view that the matter needs to be examined to this limited extent afresh by the Tribunal. Accordingly we direct ....
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....l part of the final application on programme and are hence, Application Software. Referring to the Supreme Court decision in Collector v. Bhor Industries reported in 1988 (35) E.L.T. 346, learned Counsel contended that it is settled law that in fiscal matters the most important test is that of commercial understanding. The fact that the appellants sell the items as Application Software is an instance of such understanding. It was pleaded that at any rate the classification of the Software given by Dr. Sahasrabudhe be accepted. Shri Singhal, learned Departmental Representative contended that the various Textual Authorities on computer technology have given classification of Application Software and System Software which should only be followed. Dr. Sahasrabudhe's classification is not in accordance with textual classification. The list given by the appellants even includes utility programmes as application Software which is fallacious. The learned Departmental Representative referred to the advertisement of Netware as part of operating system and hence, not Application Software and this also goes against the appellants argument that on the basis of commercial parlance their classifi....
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....ct, 1985 contains in the Chapter 85 a Notification No. 78/94, dated 1-3-1994 which grants exemption to Application Software. The Explanation to that notification reads, "for the purposes of this notification, the terms `Application Software' shall mean software programmes developed to solve specific problems, but does not include those software programmes that are concerned with the basic internal operations of the computer." This reflects Department's understanding of the term. The Senior Counsel for the appellants has cited American decisions for the judicial interpretation of the terms saying that an operational programme controls the hardware and actually makes the machine operate. An applicational programme, according to these decisions, is designed to perform specific functions once the programme information is fed into the computer. 4. It has been argued by the appellants that applying the criterion of commercial parlance which has been approved as the test applicable by the Supreme Court in such matters, all the software items furnished in the appellants list (Exhibit 2, Part I and II) should be regarded as Application Software as they are so described in the trade ....
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....ings us to the Department's evidence of opinion given by Dr. K.K. Bajaj, Senior Technical Director, National Informatics Centre, Government of India, Planning Commission. It is as follows :- This refers to your Ietter dated 25-4-1995 vide F.No. V/2/14/93-CX. Legal regarding our opinion on the list of items enclosed by you for the categorisation of software supplied with computer systems. The first list containing 71 items on pages 1 & 2 of the enclosure clearly fall in the category of System Software and Utilities as per the description given in the `Remark' column. The latter describes them as RDBMS, Compilers, Networking Products and Application Generators which are not Application Software. The last category i.e. Application Generator can be taken as Utilities. The second list of 50 items on the page 3 of the annexure includes DBMS, Compilers, Windows O.S., Networking Products which are clearly Systems Software. A few packages with the description of Word Processor, Spreadsheets, Math Package may be taken as Application Software. Dr. Bajaj has given his opinion on a perusal of the list in Exhibit 2, Parts I and II as has been done by Professor Sahasrabudhe. His opinion ....