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2013 (9) TMI 110 - AAR - Service TaxApplicability of Service-tax - Sale of software - The issues related to the proposed transactions of the applicant of selling/distributing standard off- the- shelf software and non-customized software products in India - Held that:- applicant’s views on the various issues have been accepted by the Revenue to be reflecting the correct position in law. Regarding sale of software and games - Held that:- (a) The domestic transfer of software on media comes under the purview of manufacture as held by the Hon’ble Supreme Court in the case of CIT-V vs. M/s. Oracle Software India Limited, [2010 (1) TMI 9 - SUPREME COURT OF INDIA] Therefore, the activity is not covered within the ambit of Service Tax. - (b) The royalty paid by the Applicant is very much taxable under the reverse charge mechanism. - (c) The TPJW located overseas are going to manufacture software on media on behalf of the Applicant and under negative list regime w.e.f. 01.07.2012, manufacture of goods itself comes under the negative list. Further, under Rule 4 of the Place of Provision of Service Rules, 2012, in case service provided in respect of goods that are required to made physically available by the recipient of the service to the provider of the service or to a person acting on behalf of the provider of service, in order to provide the service, the PPS shall be the location where the services are performed. PKC/WAU and CAL - Held that:- Supply of PKC and WAU are “service” as held by the Hon’ble Supreme Court in Idea Mobile Communications Ltd. Vs. CCE &C, Cochin, [2011 (8) TMI 3 - SUPREME COURT OF INDIA] and accordingly, liable to service tax. Similarly, domestic supply of CALs is incidental to the rendering of telecommunications service as held in the same case i.e. Idea Mobile Communications Ltd Vs CCE& C, Cochin. It would accordingly be liable service tax. VL Model (Volume Licensing) - Held that:- (a) Under VL, the software is to be supplied by way of electronic download of software, which involves provision of service and hence taxable. - (b) Applicant has granted license to run Microsoft software under the VL program and supply of software is a “service” and hence liable to service tax. - (c) As in the case software on media, transfer of VL media will not attract service tax. Loyalty programme - Held that:- The transactions under the “Loyalty programs” which can be a part of contract between the Applicant and its foreign holding company/companies are covered under the reverse charge mechanism and are liable to service tax. The interpretation projected by the applicant accepted.
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