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TMI Blog2023 (7) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... of being transmitted, transferred, delivered, stored and possessed. Once the said attributes are seen satisfied in the software in question, then whether the software is treated as customised or non-customised, it would nevertheless be categorised as 'goods' for the purposes of levy of tax - The said view of the Supreme Court has since been followed in later decisions including a recent decision of the Supreme Court in COMMISSIONER OF SERVICE TAX DELHI VERSUS QUICK HEAL TECHNOLOGIES LIMITED [ 2022 (8) TMI 283 - SUPREME COURT] . Merely because the software developed by the respondent/assessee in the instant case was customised for a particular user and was not sold to other users, the charges collected from the customer cannot esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Act [hereinafter referred to as the KGST Act ]. The said entry was introduced into the KGST Act with effect from 1.4.2002. The respondent/assessee had not taken any registration in respect of the sale of software affected by it, for it was under the impression that the tax liability in respect of the activity of developing and supply of customised software to its clients would only attract the levy of service tax and not sales tax. For not taking out the necessary registration under the KGST Act and paying tax in respect of the sale of customised software to its clients, penalty proposals were initiated by the Sales Tax Department for each of the assessment years aforementioned. Although the respondent/assessee preferred replies to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the Tribunal for a de novo consideration on merits. 4. In the de novo proceedings pursuant to the remand by this Court, the Tribunal, by the order impugned in these revisions, found that the decision of the Constitution Bench of the Supreme Court in Tata Consultancy Services v. State of Andhra Pradesh [(2005) 1 SCC 308] was rendered in the context of canned software , which was a reference to software not created for any particular consumer and which was available off the shelf. In other words, the Tribunal found that the judgment of the Supreme Court referred above had no application in cases of uncanned software which referred to software that was developed for a particular customer and which was not sold off the shelf. Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or other like contumacious conduct on the part of the assessee in evading tax that is due to the Government. In a case like this, we cannot find the assessee guilty of any contumacious conduct that would warrant the imposition of a penalty on it. Resultantly, we have no hesitation in dismissing the S.T.Rev.Nos.2, 5 and 8 of 2016 that have been filed by the State seeking to set aside the impugned orders of the Tribunal that set aside the penalty orders issued against the assessee for the assessment years 2002-03, 2003-04 and 2004-05 respectively. 6. When it comes to S.T.Rev.Nos.3, 4 and 7 of 2016 preferred by the State against the order of the Tribunal that set aside the orders of assessment passed against the respondent/assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 program on a CD/floppy disc from a sale of music 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 the 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 not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instruct use and installation of the supplier program 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 become goods is its marketability. 81. It is not in dispute that when a program is created it is necessary to encode it, upload the same and thereafter unload it. 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) it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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