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2022 (8) TMI 283 - SC - Service TaxDeemed sale or not - right to use the software - Antivirus Software license key/code supplied by the respondent along with CD/DVD replicated with Quick Heal Brand Antivirus Software through dealers/distributors to the EndCustomers is liable to Service Tax or not - Information Technology Service or not - transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right of use such goods - declared service under clause (1) of Section 66E of the Finance Act, 1994 or not - HELD THAT:- The Tribunal laid much emphasis on the fact that in accordance with the agreement the licensee has the right to use the software subject to the terms and the conditions laid therein. The Tribunal took notice of the fact that in accordance with the agreement the licensee is entitled to use the software/RDM service from the date of the activation of the license till the date of its expiry. The Tribunal also took into consideration the fact that the licensee is also entitled for the updates and the technical support. In view of the Tribunal, the right to use the software would amount to the “deemed sale”. The Tribunal rejected the contention of the revenue that the transaction would not be covered under subclause (d) of the Article 366(29A) of the Constitution. The declared services include the services of renting of immovable property, works contract, hire purchase/instalment payment system, supply of food/drink, etc. In other words, under the Constitution what is related to deemed sale is also covered under the deemed service as per the above Section. The sum and substance of the ratio of the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [2006 (3) TMI 1 - SUPREME COURT] as discernible is that the contract cannot be vivisected or split into two. Once a lumpsum has been charged for the sale of CD (as in the case on hand) and sale tax has been paid thereon, the revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that the updates are being provided. The artificial segregation of the transaction, as in the case on hand, into two parts is not tenable in law. It is, in substance, one transaction of sale of software and once it is accepted that the software put in the CD is “goods”, then there cannot be any separate service element in the transaction. It is so because even otherwise the user is put in possession and full control of the software. It amounts to “deemed sale” which would not attract service tax. The impugned order of the Tribunal suffers from no jurisdictional or any other legal infirmity warranting any interference in the present appeal - Appeal dismissed.
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