TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 665
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....ivities Appellant were paying customs duty on as well as VAT, on sale of goods. Alleging that the activity carried out by the Appellant amounted to taxable service, Revenue issued a Show Cause Notice No. 18/2009-10 dated 01.04.2010 demanding service tax of Rs 12,04,76,672/-, for the period from 16.05.2008 to 06.07.2009, along with interest and penalties; show cause Notice alleged that the appellants are liable to pay service tax on the Information Technology Software (ITS Services) rendered by them and import of software received by them. Adjudicating Authority, vide impugned order No. 114 of 2011 dated 26.05.2011, confirmed the demand of Rs 12,04,76,672/- along with interest and penalty of Rs 200/- per day or at the rate of 2% of the Service Tax per month under 76 and penalty of Rs. 1000/- under 78 of Finance Act,1994. Aggrieved by said order present appeal is filed. 2. When the matter came up for hearing, Ld Counsel for the Appellant submits that the demand is prima facie unsustainable, since the activity undertaken by the Appellant is sale of tally accounting software and not that of rendering any service. Ld Counsel draws our attention to the copy of sale invoices and copy of ....
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.... paintings or books or music or films the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of "goods" within the meaning of the term as defined in the said Act. The term "all materials, articles and commodities" includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. The software programmes have all these attributes. 74. It is not in dispute that when a programme is created it is necessary to encode it, upload the same and thereafter unloaded. Indian law, as noticed by my learned Brother, Variava, J., does not make any distinction between tangible property and intangible property. A „goods‟ may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attribu....
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....e goods either in a medium which stores the software or in a medium by which software is emboded in software it may then further resold by the distributor to the end user in India. 7. Regarding demand against upgradation of software, the Ld Counsel submits that as per the decision of the Hon'ble Supreme Court in the matter of CST vs. M/s Quick Heal Technologies Ltd, once lumpsum has been charged for the sale of CD as involved in present appeal and sale tax has been paid thereon, Revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that updates are being provided. Similarly in the matter of M/s Infosys Technologies Ltd (Supra), the copy rights in the enhancement upgrade maintenance and release vest with the owner assesses and same is not transferred to the customer and what is transferred only is the right to use therefore, the said enhancement, upgrade, maintenance also needs to be construed also as goods and liable to VAT. The Ld Counsel also relied upon the decision in the matter of M/s BSNL Vs Union of India (2006 (2) STR 161 (SC) and the judgment of Hon'ble Supreme Court in the matter of M/s Magic Creative Pvt Ltd Vs Commissioner....
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....ed submission. Facts being so, the details of the transactions are well within the knowledge of the Respondent and considering the same, there is no reason or justification for confirming demand of duty by invoking the extended period of limitation from 16.05.2008 to 30.09.2008. Ld Counsel further submits that the penalty imposed by Adjudication authority under Section 78 was dropped by the Appellate authority on the ground that there does not seem to be the presence of guilty mind warranting penalty under Section 78 of the Finance Act, 1994. Facts being so, as per the decision of the Tribunal in the matter of M/s Frankie Fabric India Ltd Vs CCX (2017 (52) STR 155 (Tri. Mumbai) demand of duty by invoking the extended period of limitation is unsustainable. 11. Learned Authorised Representative reiterates the findings in the impugned order and further submits that as per the evidence available on record, the Appellant were providing taxable service under Information Technologies Software services to their clients and also are registered under Service Tax for the said services. The proceedings were initiated only after confirming that the Appellant failed to pay service tax for the s....
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....ic value and it is supplied for the customer for providing mobile services. Sales tax authorities dropped proceedings for inclusion of the activation charges after remand by Hon'ble Supreme Court in the matter of M/s BSNL. As regarding the demand of duty against the goods imported in physical form by CVD mode, as per the judgment of the Hon'ble Supreme Court in the matter of M/s Tata Consultancy Services (TCS) (supra), a transaction sale of computer software is clearly a sale of "goods" within the meaning of the term as defined in the said Act. The term "all materials, articles and commodities" includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. The software programmes have all these attributes. Similarly in the matter of M/s Engineering Analyzing Centre of Excellence Pvt Ltd. Vs. C. Commercial Taxes - 2022 (3) SCC 321. It is held that if a software whether customized or non-customized satisfies these attributes i.e. the goods are capable of being brought and sold capable of transmitted, transferred delivered, stored as and possessed, they would q....