9911796707
TMI Blog2013 (9) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ll/distribute the software products in India to: a) Authorized distributors who in turn will sell them to channel partners or end users; and b) Industrial, commercial, institutional or similar users who would purchase them directly from the applicant. For these purposes, the applicant will be granted non-exclusive rights to manufacture, replicate, license and sell these products by Microsoft Corporation's affiliate company and the applicant would be making royalty payments for the exploitation of these rights, calculated as a proportion of the sales revenues. The applicant has sought ruling on a number of questions which relate to the applicability of service tax as well as customs duties in relation to their activities. The present ruling is applicable only to the questions relating to service tax. The questions relating to customs are the subject matter of a separate application. The questions in respect of service tax for which advance ruling is sought are as follows:- Question 1 - relating to Fully Packaged Products (FPP) model 1A - Software on media Q. (1A.3) Whether the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to service tax? Q. 2.6 Whether the domestic transfer of software licenses, both physically and electronically, would be tantamount to providing service and be accordingly liable to service tax? Q. 2.7 Whether the domestic transfer of billable VL media would be liable to service tax? Q.2.8 Whether the royalty paid by the applicant would be subject to service tax under the Negative List regime w.e.f. 1 July 2012, under the reverse charge mechanism? Q. 2.9 Whether the charges paid to TPJW located overseas, for the manufacture of licensed Microsoft products would be liable to service tax under the reverse charge mechanism in India? Question 3 - relating to loyalty programs Q. 3.4 Whether the transactions under the loyalty programme would be tantamount to providing service and accordingly be liable to service tax? Q. 3.5 Whether the royalty paid by the applicant would be subject to service tax under the Negative List regime w.e.f. 1 July 2012? Q.3.6 Whether the charges paid to TPJW located overseas, for the manufacture of licensed Microsoft products would be liable to service tax under the reverse charge mechanism in India? The applicant's stand and the Revenue's respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... programs etc. 3. Loyalty Programs : These are subscription based programs meant for Microsoft partners/developers etc. and provided for a limited time period. They are meant for specific target audience such as IT developers, trainers, professionals, partners etc. who are/want to be affiliated with/certified by Microsoft; Loyalty programs have variations such as Microsoft Partner Network (MPN), Microsoft Software Development Network (MSDN), Microsoft Action Package Software (MAPS), TECHNET, Microsoft Certified Trainers (MCT) and Microsoft Certified Professional (MCP) etc. It will be seen that following are the common issues relating to the FPP model which includes software on media and games on media: (a) Applicability of Service Tax on Domestic Transfer of software/games on media. (b) Applicability of service tax on royalty payable by applicant under the Negative List regime w.e.f. 1 July 2012. (c) Applicability of service tax on charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thus so far as software and games on media are concerned the stand of the applicant and the Revenue is the same. So far as PKC/WAU and CAL are concerned the issues are as follows: (a) Applicability of Service tax on Domestic transfer (b) Applicability of service tax on royalty payable by applicant under the Negative List regime w.e.f. 1st July, 2012. (c) Applicability of service charge on charges paid to TPJW by the applicant under reverse charge mechanism. It is the stand of the applicant that (a) Service tax is leviable as the same qualifies as a service (b) Service tax is leviable (c) Service tax is not leviable. For the aforesaid purpose, the stand, in respect of "Software/games on media" is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Service tax on Loyalty programme. (b) Applicability of service tax on royalty payable by applicant under the Negative List regime w.e.f. 1 July 2012. (c) Applicability of service tax on charges paid to TPJW by applicant under reverse charge mechanism. The applicant's submissions in this regard are as follows: (a) The transaction under the "Loyalty Programs" would be tantamount to service and accordingly be liable to service tax. (b) Service tax is leviable for reasons stated above in respect the other issues (c) Service Tax not leviable for reasons stated above. Additionally the responses in relation to para (b) & (c) of "Software on media" are applicable. Responding to the aforesaid submission the Revenue has submitted as follows: 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. Further it is stated that the submissions in para (b) & (c) relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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