The document discusses the ongoing dispute regarding whether goods or services should be taxed in various transactions. It summarizes some key court cases that have addressed issues like whether transactions involving leasing, food/beverages, and software constitute goods or services for the purpose of taxation. The document concludes that there is no clear consensus and the legal position continues to evolve through ongoing court interpretations and legislation.
Budget 2017-18 - analysis of direct tax proposalsoswinfo
No change in tax slabs
The rate of income tax for individuals and HUF within the slab of 2.5 lakhs to Rs. 5 lakhs reduced from 10% to 5%.
Additional surcharge of 10% on the tax payable by a person having total income exceeding Rs. 50 lakhs but not exceeding Rs. 1 crore.
Budget 2017-18 - analysis of direct tax proposalsoswinfo
No change in tax slabs
The rate of income tax for individuals and HUF within the slab of 2.5 lakhs to Rs. 5 lakhs reduced from 10% to 5%.
Additional surcharge of 10% on the tax payable by a person having total income exceeding Rs. 50 lakhs but not exceeding Rs. 1 crore.
Here we are with the Thirtieth successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
земля Первомайская : сборник научно-популярных очерковDIM0SSS
Сборник охватывает темы природоведения и локальной истории от археологического средневековья до наших дней. Широко представлены события русской колонизации Причулымья, характеристика и судьба чулымских тюрков, материалы к генеалогии старожильческого населения. Рядом с очерками, подготовленными специально для этой книги, соседствуют работы, опубликованные от 50 до 250 лет назад.
Here we are with the Thirtieth successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
земля Первомайская : сборник научно-популярных очерковDIM0SSS
Сборник охватывает темы природоведения и локальной истории от археологического средневековья до наших дней. Широко представлены события русской колонизации Причулымья, характеристика и судьба чулымских тюрков, материалы к генеалогии старожильческого населения. Рядом с очерками, подготовленными специально для этой книги, соседствуют работы, опубликованные от 50 до 250 лет назад.
Cultural Connections October 2015 Program - Financial Stabilitybayareamuseums
Museums and other cultural organizations are evolving how they define and plan for a sustainable future. They are looking for new ways to fundraise and remain relevant to the audiences they serve. How do museums plan for a sustainable future in terms of financial stability?
Join us for a look at emerging trends in fundraising and development. Our panel of professionals includes Jay Auslander, Director of Gift Planning at the California Academy of Sciences; Jeri Boomgaarden, Director of Donor Servicing and Administrative Support at the East Bay Community Foundation; Elizabeth Minor PhD, Development Associate at the Hearst Museum of Anthropology; and Rebecca Ratzkin, Senior Consultant at WolfBrown.
Panelists will discuss successes and challenges in implementing new fundraising trends including crowdfunding and day-of-giving campaigns. Also, we will learn about millennial donor trends, gift acceptance policies, and donor responses to divestitures from fossil fuels.
Budget 2017-2018 - analysis of indirect tax proposals - generaloswinfo
“There is no significant loss or gain in my indirect tax proposals. – para 181 of FM Speech on 01.02.2017
This entire presentation is linked with English, Hindi and Tamil Film Titles for the purpose of creativity and humor and has no connection with the film or its contents.
sale of medicines by hospital, medicines sold to indoor patients, VAT on sales of medicines to indoor patients, international hospital, Article 366, vishnu agencies, PRS hospital, aswini hospital , law commission report 61
The Government has enacted the CGST (Amendment) Act, 2018, the IGST (Amendment) Act, 2018, by publication in official Gazette to amend the respective GST Acts.
In this regard, we have captured major amendments in CGST Act, 2017 and IGST Act, 2017 for your perusal
Actionable claims - Whether a ‘service’ - Dr Sanjiv AgarwalD Murali ☆
Actionable claims - Whether a ‘service’ - Dr Sanjiv Agarwal - Article published in Business Advisor, dated November 25, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Browne Jacobson’s guide to public sector commercialisationBrowne Jacobson LLP
With ever more ambitious financial targets being set by central government, the need to look at different ways to make savings, safeguard services and generate income are becoming more important for local authorities and even, to some degree, central government departments.
Commercialisation of public services is not a new thing, but recent years have seen the public sector becoming more entrepreneurial and inventive in the ways in which it delivers services. For the purposes of this report, commercialisation means the delivery of services by a public body in a way which results in making profit or reducing costs, although this may not be the primary or only aim of provision of the services.
Our guide provides information and guidance for public bodies considering new, commercial approaches to service delivery. It will primarily be relevant to local authorities, although many of the issues will also be relevant to central government and other public bodies.
https://www.brownejacobson.com/sectors-and-services/sectors/public-sector
A detailed perspective of the background, the present functioning and the future possibilities of the merger control regime in India as it unfolds with the passage of time by the architect of merger control in India.
Expenses opposed to public policy and social norms need to be disallowed in i...D Murali ☆
Expenses opposed to public policy and social norms need to be disallowed in income-tax assessments - T.N. Pandey. - Article published in Business Advisor, dated July 25, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
VAT driven local purchases
Cost driven CST purchases
Duty burden on imports
Complex State Laws
Ever changing tax landscape
Different decisions on the same issue
Border controls
VAT driven local purchases
Cost driven CST purchases
Duty burden on imports
Complex State Laws
Ever changing tax landscape
Different decisions on the same issue
Border controls
Background
Even though Union Budget, 2017 is supposed to be on 01.02.2017, the Government has introduced significant changes to service tax law through the issue of Notification No. 01/2017, 02/2017, 03/2017 and 04/2017 dated 12.01.2017.
On 12th January 1946, Rs. 500 was demonetized and people were given 10 days for exchange. After this period explanation was required as to why exchange was not done in the first 10 days.
The Scheme was a failure as out of the total issue of Rs. 143.97 crores of High Denomination Notes, Rs. 134.90 crores were exchanged. Thus only Rs. 9 crores were demonetized.
1946 exercise turned out to be only an exchange.
Enrolment Plan for your State
The schedule of the enrolment activation drive for states is given below. We encourage you to complete the enrolment during the specified dates. However, the window will be open till 31/01/2017 for those who miss the chance.
The Goods & Service Tax regime is most likely to become a reality from April 2017. The Government of India has been taking a number of steps at unbelievable speed to implement the new regime. Following the Model Law, the Draft Rules for registration, payment, invoice, returns and refunds were released. The Government has also released an FAQ on GST.
The mood is positive for GST with the Congress appearing to soften its stand and press reports indicating a possible five hour debate in the Parliament on the 122nd Constitutional Amendment.
Section 206AA – Rule 37BC
Central Board of Direct Taxes vide Notification No. 53/2016 dated 24.06.2016 has amended the Income Tax Rules, 1962 by inserting a new Rule 37BC through the IT (17th Amendment) Rules, 2016.
The e-commerce boom was marked by multiple players, rosy valuations and now slowly reality has set in and the price wars have taken their toll. The VAT authorities across the country have had their tryst with this industry with notices, demands, levy of entry tax and litigation. Currently whenever there is a tax or a business problem, the immediate response from the industry or the administrator or the media is that GST is the only solution.
Section 65(105)(zzzh) provides for a levy of service tax on services in relation to ‘construction of complex’ and an explanation was added by Finance Act, 2010.
The new law provides for an equalisation levy of 6% on the amount of consideration received, or receivable on specified services carried on by a non-resident not having a permanent establishment in India.
Article co-owners of house property - dt & dt implicationsoswinfo
When more than one person owns a property and the said property realizes revenue in the form of rent and interest on loan is involved, direct and indirect tax implications require examination in the light of relevant statutory provisions and judicial precedents.
Tax Quest
Finance Act, 2016 has effected a number of changes that are effective from 01.06.2016 and this
alert seeks to provide a brief view on such changes.
1. Service Tax on Ocean Freight – Import Segment
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the what'sapp contact of my personal pi merchant to trade with
+12349014282
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the what'sapp contact of my personal pi vendor
+12349014282
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the what'sapp information for my personal pi vendor.
+12349014282
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the what'sapp number.
+12349014282
Tax System, Behaviour, Justice, and Voluntary Compliance Culture in Nigeria -...
Icai goa - ser. tax - critical issues
1. SERVICE TAX ADMINISTRATION - GOODS vs. SERVICES –
THE NEVER ENDING DISPUTE
K. VAITHEESWARAN, Advocate
vaithilegal@yahoo.co.in
Sales Tax dates back to 1939 when the Madras General Sales Tax Act, 1939
was brought into force w.e.f. 01.10.1939. All States followed suit and sales tax
is one of the major sources of revenue for States. The 46th
Amendment to the
Constitution brought in the concept of deemed sales in the year 1986.
Transactions such as works contracts, lease, supply of food and beverages, etc.
were brought within the ambit of deemed sales.
Value Added Tax system was introduced in Haryana in 2003 and most of States
in 2005. VAT has considerably improved the finances of States and remains as
a tax on sale or purchase of goods levied by the State under Entry 54, List-II,
Schedule-VII, Constitution of India.
Service Tax was introduced through Chapter V of the Finance Act 1994
providing for a levy of service tax on telephones, insurance and stock broking.
There is no separate enactment for service tax and is still governed by Chapter
V and VA of the Finance Act, 1994, as amended. The Parliament expanded the
scope of the levy by adding new and new services every year. Finance Act,
2012 has made a paradigm shift and introduced a new regime of levy of service
tax w.e.f. 01.07.2012. In the new dispensation, there is a definition of service
and a levy of service tax at the rate of 12% on all services provided or agreed to
be provided in the taxable territory other than those specified in the Negative
List or those services which are in the exempted list.
The biggest challenge for the tax payer is that there is constant attempt either
through legislation by the Parliament or through interpretation to enter the
domain of States in the field of taxation. There are number of occasions were
the Courts have been called upon to decide upon the Constitutional validity of a
provision which seeks to levy service tax and the law has evolved over the
years.
2. Leasing transactions
In the earlier dispensation Banking and Financial Services were taxed by a
specific definition and the definition included financial leasing services
including equipment leasing and hire purchase. The validity of the levy was
challenged and the Supreme Court upheld the validity of the levy in the case of
Association of Leasing and Financial Service Companies Vs. Union of India
(2010) 20 STR 417. The Supreme Court has observed in para 22 of the
decision as under:-
“In substance a finance lease unlike an operating lease is a financial
loan (assistance / facility) by the lessor to the lessee. That, in the
bailment termed ‘hire’ the bailee receives both possession of the chattel
and the right to use it in return for remuneration. On the other hand,
equipment leasing is long term financing which helps the borrower to
raise funds without outright payment in the first instance. Here the
interest element cannot be compared to consideration for lease / hire
which is in the nature of remuneration (consideration). Thus financing
as an activity or business of the NBFCs is different and distinct from
operating lease / hire purchase agreements in the classical sense. The
elements of the finance lease or loan transaction are quite different from
those in equipment leasing / hire purchase agreements between owner
(lessor) and the hirer (lessee).
In the new dispensation the definition of service expressly excludes a transfer or
delivery or supply of any goods which is deemed to be a sale within the
meaning of Article 366(29A) of the Constitution. Section 66E which covers
declared service, itemizes, activities in relation to delivery of goods on hire
purchase or any system of payment by installments as well as transfer of goods
by way of hiring, leasing, licensing or in any such manner without transfer of
right to use such goods.
3. Supply of food and beverages in restaurants
Notification No. 25/2012 dated 20.06.2012 with effect from 01.07.2012 gives a
list of services which are exempt from the whole of service tax. The said
Notification has been amended by Notification No.3/2013 dated 01.03.2013
w.e.f. 01.04.2013. The relevant entry is reproduced below:-
19. Services provided in relation to serving of food or beverages by a
restaurant, eating joint or a mess, other than those having the
facility of air-conditioning or central air-heating in any part of the
establishment, at any time during the year.
The definition of service in terms of Section 65B(44) of the Finance Act, 1994
specifically excludes transactions referred to in Article 366(29A). Article
366(29A)(f) of the Constitution of India (introduced by the 46th
Amendment)
refers to tax on the supply by way of or as part of any service or in any other
manner whatsoever of goods being food or any other article for human
consumption or any drink (whether or not intoxicating), where such supply or
service is for cash, deferred payment or other valuable consideration.
Fundamentally there can be a legal issue with reference to levy of service tax on
hotels and restaurants since sale of food is sale of goods and is a State subject.
It is also relevant to note prior to the 46th
Amendment, a Three Member Bench
of the Supreme Court in the case of Northern India Caterers (India) Vs. Lt.
Governor of Delhi (1978) 42 STC 386 has held that service of meals to casual
visitors in the restaurant is taxable as sale. A Five Member Bench of the
Supreme Court in the case of State of Himachal Pradesh Vs. Associated
Hotels of India Ltd. (1972) 29 STC 474 had held that in a transaction which is
essentially one of service by the hotelier in the performance of which and as
part of the amenities incidental to the service, the hotelier served meals at stated
hours, the Revenue was not entitled to split up the transaction into two parts,
one of service and other of sale of food stuff and to split up also the bill charged
by the hotelier as consisting of charges for lodging and charges for foodstuff
served to him with a view to bring the latter under the Act. There was no sale
of food stuff and the Company was not liable to pay sales tax in respect of
meals served to guests in its hotel.
4. A Five Member Bench of the Supreme Court in the case of K.Damodaraswamy
Naidu Vs. State of Tamil Nadu (1999) 117 STC 1 has held as under:-
“Once the definition of sale in the said Tamil Nadu Act was amended to
include the supply of food and drink, the supply of food and drink fell
within the purview of the charging section thereof and became exigible to
tax there under. ....
The provisions of sub-clause (f) of clause (29A) of Article 366 need to be
analysed. Sub-clause (f) permits the States to impose a tax on the supply
of food and drink. The supply can be by way of a service or as part of a
service or it can be in any other manner whatsoever. The supply or
service can be for cash or deferred payment or other valuable
consideration. The words of sub-clause (f) have found place in the Sales
Tax Acts of most States and as we have seen they have been used in the
said Tamil Nadu Act. The tax therefore is on the supply of food or drink
and it is not of relevance that the supply is by way of service or part of a
service. In our view therefore the price that the customer pays for the
supply of food in a restaurant cannot be split up as suggested by the
learned counsel. The supply of food by the restaurant owner to the
customer though it may be a part of the service that he renders by
providing good furniture, furnishing and fixtures, linen, crockery and
cutlery, music, a dance floor, and a floor show is what the subject of the
levy. The patron of a fancy restaurant who orders a plate of cheese
sandwiches whose price is shown to be Rs.50/- on the bill of fare knows
very well that the innate cost of the bread, butter, mustard and cheese in
the plate is very much less, but he orders it all the same. He pays Rs.50/-
for its supply and it is on Rs.50/- that the restaurant owner must be
taxed.
It is interesting and relevant to note that the Five Member Bench of the
Supreme Court decided this issue after the 46th
Amendment to the Constitution
where the supply of food by way of service or part of service was treated as a
sale.
A Three Member Bench of the Supreme Court in the case of East India Hotels
Vs. Union of India (2000) 121 STC 46 has held that food in a restaurant has to
be necessarily regarded as goods. According to Section 2(1), the transfer of
property in goods by one person to another would amount to sale. With cooked
5. food or food which is supplied in a restaurant falling within the definition of the
goods in Section 2(g), transfer of property in the same would amount to sale as
provided in Section 2(1). These definitions have to be read along with Section
3 and Section 4. Section 4(1)(c) clearly shows that in respect of food or drink
served for consumption in a hotel or restaurant or a part thereof, the same would
be regarded as a sale and taxable turnover in respect thereto would be taxed.
The complexity if any arises out of the decision of a Two Member Bench of the
Supreme Court in the case of Tamil Nadu Kalyana Mandapam Association
Vs. Union of India (2004) 135 STC 480 has held in para No.54 as under:
“A customs goes to mandap keeper, say a star hotel, not merely for the
food that they will provide but for the entire variety of services provided
therein which result in providing the function to be solemnised with the
required effect and ambience. Similarly the services rendered by
outdoor caterers are clearly distinguishable from the service rendered in
a restaurant or hotel inasmuch as, in the case of outdoor catering service
the food/eatables/drinks are the choice of the person who partakes of the
services. He is free to choose the kind, quantum and manner in which
the food is to be served. But in the case of a restaurant, the customer’s
choice of foods is limited to the menu card. Again in the case of outdoor
catering, the customer is at liberty to choose the time and place where
the food is to be served. In the case of an outdoor caterer, the customer
negotiates each element of the catering services, including the price to be
paid to the caterer. Outdoor catering has an element of personalised
service provided to the customer. Clearly the service element is more
weighty, visible and predominant in the case of outdoor catering. It
cannot be considered as a case of sale of food and drink as in restaurant.
Though the service tax is leviable on the gross amount charged by the
mandap keeper for services in relation to the use of a mandap and also
on the charges for catering, the Government has decided to charge the
same only on 60 per cent of the gross amount charged by the mandap
keeper to the customer.
The Supreme Court in para 52 of the judgement has observed that ‘a levy of
service tax on a particular kind of service could not be struck down on the
ground that it does not conform to a common understanding of the word
6. “service” so long as it does not transgress any specific restriction contained in
the Constitution.’
A Single Judge of the Kerala High Court in the case of Kerala Classified
Hotels and Resorts Association Vs. Union of India (2013) 31 STR 257 has
held that when food or alcoholic beverages were supplied as part of any service,
such transfer was deemed to be sale and Article 366(29A) allowed the State to
impose tax on such transfer, there cannot be a different component of service
which can be subjected to service tax under the residuary power of the
Parliament under Entry 97 of List I of Constitution of India.
The Division Bench of the Bombay High Court has not accepted the view of the
single judge of the Kerala High Court and has upheld the levy in the case of
Indian Hotels and Restaurants Association Vs. Union of India (2014 TIOL
498).
Interestingly, the Uttarakhand High Court in the case of Valley Hotel & Resorts
Vs. Commissioner (2014-TIOL-600) has held that since a restaurant pays
service tax on 40% of the value VAT cannot be imposed on such value. The
Court held that VAT can be imposed only on sale of goods and not service.
Since the authority competent to impose service tax has also assumed
competent to declare what is a service and the State has not challenge the same,
no VAT can be imposed on that amount.
Software
The Supreme Court in the case of Associated Cement Companies Ltd. Vs.
Commissioner of Customs (2001) 174 STC 59 has held that the moment
information or advice is put on a media, whether paper or diskette or any other
article, what is supplied becomes chattel. Drawings, designs, manuals are all
goods.
The Supreme Court in the case of Tata Consultancy Services Vs. State of
Andhra Pradesh (2004) 178 ELT 22 has observed as under in paras 24, 72 and
74 as under:
“A software programme may consist of various commands which enable
the computer to perform a designated task. The copyright in that
7. programme may remain with the originator of the programme. But the
moment copies are made and marketed, it becomes goods, which is
susceptible to sales tax. Even intellectual property, once it is put to a
media, whether it be in the form of books or canvas (in case of painting)
or computer discs or cassettes, and marketed would become ‘goods’. We
see no difference between a sale of a software, programme on a
cassette/CD or a sale of a film on a video cassette/CD. In all such cases,
the intellectual property has been incorporated on a media for purposes
of transfer. Sale is not just of the media which by itself has very little
value. The software and media cannot be split up. What the buyer
purchases and pays for is not the disc or the CD. As in the case of
paintings or books or music or films the buyer is purchasing the
intellectual property and the media i.e. the paper or cassette or disc or
C. 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, delivered, stored,
possessed etc. A software may be intellectual property but such
intellectual property contained in a medium is bought and sold. It is an
article of value. It is sold in various forms like floppies, disks, CD-
ROMs, punch cards, magnetic tapes etc. Each one of the mediums in
which the intellectual property is contained is a marketable commodity.
They are visible to senses. They may be a medium through which the
intellectual property is transferred but for the purpose of determining the
question as regard leviability of the tax under a fiscal statute, it may not
make a difference. A programme containing instructions in computer
language is subject-matter of a license. It has its value to the buyer. It is
useful to the person who intends to use the hardware, viz. the computer
in an effective manner so as to enable him to obtain desired results. It
indisputably becomes an object of trade or commerce. These mediums
containing the intellectual property are not only easily available in the
market for a price but are circulated as a commodity in the market. Only
because an instruction manual designed to instruct use and installation
of the super programme is supplied with the software, the same would
not necessarily mean that it would cease to be a ‘goods’. Such
instructions contained in the manual are supplied with several other
goods including electronic ones. What is essential for an article to
8. become goods is its marketability. 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 does not recognize or make a 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) utility (b) capable of
being bought and sold (c) capable of transmitted, transferred, delivered,
stored and possessed. If a software whether customized or non-
customized satisfies these attributes, the same would be goods. Unlike
the American Courts, Supreme Court of India has also not gone into the
question of severability”.
The Supreme Court in para 26 of the judgment has held as under:
“Mr. Sorabjee submitted that the High Court correctly held that
unbranded software was “undoubtedly intellectual 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 contends 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.”
The Karnataka High Court in the case of Sasken Communication
Technologies Ltd. Vs. JCCT (2012) 55 VST 89 has held that:
(i) VAT can be levied only if there is transfer of property in goods.
(ii) Development of software for client under a contract where all inventions,
discoveries and ideas conceived as direct or indirect result of services,
belong to the client does not involve sale of goods.
9. (iii) The terms of contract did not indicate sale or purchase of software and
only an agreement for providing service.
The Madras High Court in the case of Infotech Software Dealers Association
Vs. Union of India (2010) 20 STR 289 while upholding the levy of service tax
under Section 65(105)(zzzze) of the Finance Act, 1994 has observed as follows
in para 22 of the decision
“If the software is sold through the medium of internet in the form of
downloadable, it does not fit into the ambit of “IT software of any
media”. In that event, it is possible to hold that when an access control is
given through an internet medium with a username and password and
when there is no CD or other storage media for the item, it does not
satisfy the requirement of being ‘goods’ or the entry used in the statute.”
The Madras High Court further held that the end user of the software was a
person who used a product or utilised a service. He does not have any
significant contact with the developer/designer/ creator of the software. When a
transaction took place between the end-user and the members of the association,
it was not a sale of software as such, but only the contents of the data stored in
the software which would amount to only service. For a deemed sale under
article 366(29A)(d) of the Constitution of India, there must be transfer if right
to use any goods and when the goods as such were not transferred, the question
of deeming sale of goods did not arise and in that sense, the transaction would
be a service and not a sale.
In works contracts, the State machinery provides that the material value shall be
taken as 70% and labour value as 30% in case records are not available. The
service tax valuation mechanism considers value of services as 40% for original
works including civil works; 70% for repair and maintenance contract involving
materials and 60% for repair and maintenance contract involving immovable
property.
In our current system VAT is a levy on goods and service tax is a levy on
services. There is an increase in the attempt by service tax to encroach into the
territory which is the domain of the States. Many companies fearing litigation
have chosen to charge both VAT and Service Tax which is highly prohibitive
10. from a consumer perspective. Even though the debate leads to GST, a
deliberate or a conscious inroad into State territory cannot be the justification
for a solution in the form of GST.