TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 1207
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....canned software' produced by third parties and their own software deployed in the banking industry. He submits, that these activities are not in conformity with the description of the taxable service in section 65(105)(zzzze) of Finance Act, 1994 and contends that the two show cause notices, dated 3rd October 2011 and 6th March 2012, are not in consonance with the principles of natural justice by having failed to invoke the specific sub-clause within the definition of the 'taxable service'. Reliance is placed by him on the decision of the Hon'ble Supreme Court in Gajanan Visheshwar Birjur v. Union of India (UOI) and Ors. [1994 (72) ELT 788 (SC)], Amrit Foods v. Commissioner of Central Excise, UP [2005 (190) ELT 433 (SC)] and Odyssey Organics P Ltd v. Commissioner of Central Excise, Raigad [2017 (47) STR 289 (Tri.). Further, contending that the impugned order has travelled beyond the show cause notices by fastening liability under sub-clause (v) instead of sub-clause (i), he seeks that the order should be set aside. 3. Challenging the taxability itself under sub-clause (v) of section 65(105)(zzzze), it is contended that the decision of the Hon'ble Supreme Court in State Bank of Ind....
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.... the public domain or for the purpose of commercial exploitation. 158. Secondly, under the definition of "copyright" in Section 14 of the Copyright Act, the emphasis is that it is an exclusive right granted to the holder thereof. This condition is not satisfied in the case of JTM because the license granted to it by the assessee is expressly stated in Clause 20.1 as a "non exclusive restricted license". This means that the supplier of the software, namely, the assessee, can supply similar software to any number of cellular operators to which JTM can have no objection and further all the cellular operators can use the software only for the purpose of their own operation and maintenance of the system and not for any other purpose. The user of the software by the cellular operators in the public domain is totally prohibited, which is evident from the use of the words in Article 20.1 of the agreement, "restricted" and "not otherwise". Thus JTM has a very limited right so far as the use of software is concerned. It needs no repetition to clarify that JTM has not been given any of the seven rights mentioned in Clause (a) of Section 14 or the additional right mentioned in Sub-clause (i....
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....f Learned Counsel that the detailed exposition should place the activities of the appellant beyond the pale of the said sub-clause. Inviting our attention to circular no. 354/89/TRU dated 4th November 2009 of the Central Board of Excise & Customs clarifying that '6. Accepting their plea, in Budget 2009, two parallel notifications were issued on the excise and customs side. Vide notification no. 22/2009-C.E., dated 7-7-2009, partial exemption from excise duty was provided to packaged or canned software on that portion of the value which represents the consideration for the transfer of the right to use for commercial exploitation, as on this portion, service tax would be leviable under the ITSS. Similar exemption from CVD was provided vide notification No. 80/2009-Customs dated 7-7-2009 on such software. These exemptions were notified to ensure that while importing or manufacturing packaged software, the importer/manufacturer is spared from paying customs duty/excise duty on the value attributable to transfer of 'right to use'.' as elaboration of the intent to tax, he discountenances the stand of the adjudicating authority. 5. According to Learned Authorised Representative, the p....
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....ual property". Mr. Sorabjee submitted that the High Court fell in error in making a distinction between branded and unbranded software and erred in holding that branded software was "goods". We are in agreement with Mr. Sorabjee when he co/ntends that there is no distinction between branded and unbranded software. However, we find no error in the High Court holding that branded software is goods. In both cases, the software is capable of being abstracted, consumed and use. In both cases the software can be transmitted, transferred, delivered, stored, possessed etc. Thus even unbranded software, when it is marketed/sold, may be goods. We, however, are not dealing with this aspect and express no opinion thereon because in case of unbranded software other questions like situs of contract of sale and/or whether the contract is a service contract may arise.' and of the Hon'ble High Court of Madras in Infotech Software Dealers Association v. Union of India [2010 (20) STR 289 (Mad.)] to the effect that '31. From the above, the dominant intention of the parties would show that the developer or the creator keeps back the copyright of each software, be it canned, packaged or customised, a....
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....ons to secure a database, advice on proprietary information technology software, (v) providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products, (vi) providing the right to use information technology software supplied electronically;' and that instead of 'canned software' which is considered to be goods, the appellant herein is alleged to have supplied 'customized software'. 8. It is an admitted fact that the appellant is in the business of perpetual licensing and software licence, sale of third-party software, customization of software as per requirement of customers and implementation and maintenance of software. The taxability of 'information technology software service' has had its own share of teething problems with various clarifications having been issued pursuant to representation from the trade. The software that is sold on physical media comprises the inherent contents therein along with right to use and the incorporation of the above acti....