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TMI Blog2024 (11) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable. Service tax demand - The software imported and sold by the Appellant is import and sale of goods and is not exigible to service tax. Goods imported and sold in downloaded form through Internet , as per the judgment of the Hon ble Supreme Court in the case of M/s Tata Consultancy Services [ 2004 (11) TMI 11 - SUPREME COURT (LB)] the moment copies are made and marketed, it became goods which are subject to sales tax. Demand against upgradation of software , as per the decision of M/s Quick Heal Technologies Ltd [ 2022 (8) TMI 283 - SUPREME COURT] 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. Thus, it is well settled that once Appellant had paid VAT on the sale of goods, service tax cannot be demanded on such sale of goods. - Hon ble Mr. P. Anjani Kumar , Member ( Technical ) And Hon'ble Mr. P. A. Augustian , Member ( Judicial ) Mr.V. Raghuraman, Sr. Advocate for Appellant Mr. Bhanumurthy J.S. Advocate for Appellant Ms. Sneha J.P., Chartered Accountant for Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Authority. as per the distributor agreement dated 01.02.2006, the Appellant is appointed as distributor for marketing and installation of software not exclusive basis. 3. Ld Counsel submits, as regards the demand of duty against the goods imported in physical mode (in CVD mode), that it became goods which are liable to sale tax. The Ld Counsel also draw our attention to the judgment of the Hon ble Supreme Court in the matter of M/s Tata Consultancy Services (TCS) Vs. CC State of Andhra reported in 2004 (178) ELT 22 (SC) where it is held that: - 24. In our view, the term goods as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. (supra). A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be goods,. Since all the above attributes are satisfied, the software imported by the Appellant is goods and not liable to service tax. 5. Ld Counsel also draw our attention to the judgment of the Hon ble Supreme Court in the matter of CST vs. M/s Quick Heal Technologies Ltd (2022 (03) GSTL 305 SC (para 65) wherein it was held that if it is a transaction of sale of software and once if it is accepted that software to be in the CD and there cannot be in a separate service element in the transaction. Ld Counsel also relies the decision of the Hon ble High Court of Karnataka in the matter of Infosys Ltd Vs. DC CT (2015 TIOL 2106-HC-KAR-VAT) wherein it was held that packaged readymade, of the shelf software are pure goods liable only to VAT. The Ld Counsel also submits that as held by the Hon ble High Court of Madras in the matter of M/s Infosys Technologies Ltd Vs. Commissioner of Commercial Taxes (2009 (233) ELT 56), if the software whether customized or non-customized satisfy the rule as a goods, it will also be goods for the purpose of sale tax. Thus, the software imported and sold by the Appellant is import and sale of goods and not liable to service tax. 6. As regarding the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BIC instruction dated 29.02.2008 wherein it is clarified that packaged software sold off the shelf being treated as leviable to excise duty @ 8%. The Ld Counsel also draw our attention to the definition of exact Information technology software (ITS) service defined in Section 55 (53a) and extract of taxable service under Section 65(105) zzzze of the Finance Act, 1944 and submits that as per the law laid down by the Apex Court in the matter of M/s Tata Consultancy Services (Supra), sale of pre-packaged or scanned software is in the nature of sale of goods and is not covered under the heading of intellectual property services. 9. The Ld Counsel further submits that even if it is held that Appellant is liable to pay service tax, the Appellant is entitled for the benefit of Notification No. 12/2003-ST dated 20.06.2003; value of goods and material is to be excluded for calculating the value of services. Further, he submits that since the Appellant has not collected separate service tax, value adopted for the service tax computation is to be considered in cum duty basis. Further the Ld Counsel submits that as per judgment of Hon ble Supreme Court in the matter of M/s Formica India Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secure a database, providing the right to use a software for commercial exploitation, marketing/sale of the software and providing right to use the software supplied electronically. Thus, the activity of the appellant is classifiable under the taxable category of Information Technologies Software services and liable to pay service tax. Ld AR also relied on the judgment of the Hon ble Supreme Court in the matter of M/s Idea Mobile Communication Vs CC, Cochin (2011 (23) STR 433 (SC), M/s Infotech Software Dealers Association Vs Union of India (2010 (20) STR 289 (Mad), M/s K7 Computing Pvt Ltd Vs Commissioner of GST Central Excise (2022 (59) GSTL 129 (Mad), M/s K7 Computing Pvt Ltd Vs Commissioner of GST Excise, Chennai (2021 (44) GSTL 364 (Mad). 12. Heard both sides. Regarding demand of duty by invoking the extended period of limitation from 16.05.2008 to 30.09.2008, once penalty imposed by Adjudication authority under Section 78 was dropped by the Appellate authority on the ground that there does not seems to be the presence of guilty mind warranting penalty under Section 78 of the Finance Act, 1994 and when said finding has not been challenged by the revenue, following the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfy the rule as a goods, it will also be goods for the purpose of sale tax. Thus, the software imported and sold by the Appellant is import and sale of goods and is not exigible to service tax. 14. As regarding the goods imported and sold in downloaded form through Internet, as per the judgment of the Hon ble Supreme Court in the case of M/s Tata Consultancy Services (Supra), the moment copies are made and marketed, it became goods which are subject to sales tax. 15. Regarding demand against upgradation of software, 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. Thus, it is well settled that once Appellant had paid VAT on the sale of goods, service tax cannot be demanded on such sale of goods. 16. Considering the above, the impugned order is set aside and appeal is allowed with consequential relief if any in accordance with law. ( Order dictated and pronounced in open court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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