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TMI Blog2001 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... court was delivered by S. RAJENDRA BABU J.- -- In these matters the Andhra Pradesh High Court concluded that software is of two categories--- (i) software which is specialised and exclusively custom-made to cater to the needs of individual clients, and (ii) software which is standardised and marketed for the use of certain classes of clients, like the Oracle, Lotus, Master Key, N-Export, Ex. Unigraphics, etc., and held that for the purpose of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act"), it is not necessary to consider whether the definition of "goods" in section 2(h) of the Act has to be read down so as to exclude software from it. The High Court took the view that the first category may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on which it is stored ; that though software has a physical component, these physical components are merely tangential incidents of a computer programme, they do not change the programme's clearly intangible character ; that the essence of the contract is the right to use the software, therefore, the essence of the transaction text must be applied, that in PSI Data Systems Ltd. v. Collector of Central Excise [1997] 2 SCC 78, it is held that if discs, floppies, CD ROMs are sold along with the computer, their value is not to be included for assessing excise duty ; that a software programme is a process that can be used to achieve a certain result whereas a music cassette, etc., is the endproduct in itself. While on behalf of the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isc and books, music, etc., can also be transferred from one medium to another ; that in Wal-Mart Stores, Inc. v. City of Mobile County of Mobile [1996] S. Ct. of Alabama 200-622, the court said, "software is an arrangement of matter recorded in a tangible medium and, therefore, constitutes a corporeal body" ; that whether another medium was actually used should be seen. This court in Associated Cement Companies Ltd. v. Commissioner of Customs, AIR 2001 SC 862 ; [2001] JT 2 SC 141, examined a similar question in the context of the Customs Act and Tariff Act with reference to the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 wherein several decisions rendered relating to levy of sales tax in the context of work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral decisions cited therein. The debate adverted to by us as to development of customised computer software programmes for a customer do not constitute computer and data processing services because the true object of a software development contract is not to obtain the services of the consultant, but to obtain software programmes consisting of intangible intellectual property which are not taxable. The services used to customise and develop the computer software are part of the final software package sold and not separate computer and data processing services subject to tax : This debate will be incomplete without considering the decisions in addition to those cited in Associated Cement Companies Ltd.,s case, AIR 2001 SC 862 ; [2001] J ..... X X X X Extracts X X X X X X X X Extracts X X X X
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