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TMI Blog2022 (3) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... SASKEN COMMUNICATION TECHNOLOGIES LTD. VERSUS JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) -3 BANGALORE [ 2011 (4) TMI 566 - KARNATAKA HIGH COURT ]. In the case of Bharath Sanchar Nigam Limited and another v. Union of India and others, [ 2006 (3) TMI 1 - SUPREME COURT ], the Hon ble Apex Court has considered the mutual exclusivity reflected in Article 246(1) of the Constitution and has held that sales tax and the service tax are mutually exclusive of each other. The reasoning of the authorities that the original software which was sold was still the property of the respondent and later versions developed or upgraded are also software which is again transacted by allowing access to the customers for a consideration and hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnataka Appellate Tribunal at Bengaluru ( Tribunal for short) in STA Nos.2262 to 2285/2013 relating to the tax periods April 2009 to March 2011. 2. The respondent herein is a dealer registered under the provisions of the Act and is engaged in the trading of computer software and hardware. The respondent is a channel partner for various software companies such as Microsoft, McAfee etc. During the tax periods in question, the respondent had effected sales of software licences and had paid tax under the provisions of the Act. 3. When the case was taken up for audit, the prescribed authority has noticed that no tax was paid on the turnover relating to the renewal of software licences. Accordingly, after issuance of notice and upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired, the customer would not be able to operate the software. If the customer wishes to continue using the software, renewal of the same is essential which permits the customer to use the software for a new extended period of time. The Tribunal grossly erred in holding that the renewal of software licence is merely a service and not transfer of goods. Thus, the learned Additional Government Advocate argued that the renewal of software licence is exigible to levy of sales tax under the provisions of the Act as deemed sales i.e., transfer of right to use the goods. 5. Learned counsel appearing for the respondent assessee justifying the impugned order submitted that the transaction of renewal of software licence is assessed to service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersy is with respect to the amount received by the respondent towards renewal of software licences raising service tax invoices. 8. The copies of the service tax invoices and half yearly service tax returns filed by the respondent before the Tribunal are considered and some of the sample copies of the purchase orders/service tax invoices relating to the transactions are extracted by the Tribunal. 9. Section 65 (105)(zzzze) of the Finance Act, 1994, defines information technology services, which includes adaptation, upgradation, enhancement, implementation and other similar services related to information technology software. The word service is defined under Section 65-B(44) of the Finance Act, 1994, which has come into effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power. They might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects . No one denies the legislative competence of States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. This does not however allow State to entrench upon the Union list and tax services by including the cost of such service in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware functional or usable under the contract. Once the original software is sold, the same would not continue to be the property of the respondent. The post sale activity relating to renewal of software licence is directly from the foreign vendors to the end customers electronically through e-mail. 13. These aspects would indicate that the service tax collected on this transaction of renewal of software licence at 10.30% and remitted to the Central Government cannot be construed as transfer of right to use the goods, more particularly, when the goods are not available with the respondent. When the original goods are not available with the respondent, the aspect theory and the divisibility of the contract in furtherance of deemed sale as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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