Supply of Software, Goods and Services Tax - GST

[Kaustubh Karandikar]

XYZ is registered in Maharashtra under GST. They are also having an Office in Chennai but the same is not registered. Chennai office is developing a software (both customized and Standard) and sending to Maharashtra unit through email.

1) Is Chennai unit required to register with GST and charge GST to Maharashtra unit?

2) If yes, it will be treated as supply of goods or services?

Posts / Replies

[Amit Agrawal]

Sir, you never stops constantly raising interesting queries .... Please keep it up as it helps this forum as interesting and engaging.

I think I know the answers to your subject queries. But, needs time to re-check on some aspects before putting my views here. I will get back soon. (Got to go for some work).

See you soon!

And please keep this up.

[Shilpi Jain]

This will be a supply of service and the Chennai unit would be required to take registration to comply.

[Amit Agrawal]

As was in old regime, issue (whether goods or services) continues to be controversial even under GST.

To understand some of the aspects of the controversy, please see the followings:

A. AAR ruling IN RE: M/S. KEYSIGHT TECHNOLOGIES INDIA PVT. LTD, as reported in 2022 (4) TMI 1290

B. CBIC in its FAQs dated 15.12.2018 at Q. No. 17 had said that "Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software shall be treated as supply of services as per No. 5 (2)(d) of Schedule –II of the GST law".

C. CBIC vide its sectoral FAQs on Information Technology (‘IT’) and IT enabled services had said that "in terms of Schedule II of the CGST Act, ‘upgradation and implementation of information technology software or permitting the use or enjoyment of any intellectual property right are treated as services. But, if a pre-developed or pre-designed software is supplied in any medium/storage (commonly bought off-the-shelf) or made available through the use of encryption keys, the same is treated as a supply of goods classifiable under heading 8523.".

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ganeshan Kalyani]

The Chennai unit has to take registration and in that case it can claim input tax credit on its inward supply.