TMI Blog2005 (12) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... ith technical know-how for consideration. The term goods used in the Kerala General Sales Tax Act has got a broad and wide meaning. Goods have been defined to mean all kinds of movable properties except those specified, namely, newspapers, actionable claims, stocks, shares, etc. Goods which are capable of being abstracted, consumed and used and/or transmitted, transferred, delivered, stored or possessed, etc., are goods for the purposes of sales tax. Technical know-how can also be transmitted, transferred, delivered, stored or possessed, etc. Agreement would definitely indicate that there is a transfer of technology for the manufacture of CCC deputing personnel for consideration, i.e., through human media. Transfer of technology in any manner either through floppy disc, CD or through deputing personnel, etc., would constitute sale within the meaning of section 2(xxi) of the Kerala General Sales Tax Act. Reference made to the judgment of the Supreme Court in ASSOCIATED CEMENT COMPANIES LTD. VERSUS CC [ 2001 (1) TMI 248 - SUPREME COURT] where Apex Court held Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these cases. Hence we are disposing of these cases by a common judgment. For convenient sake we may refer to the facts in S.T.R. No. 291 of 2005. 2.. Petitioner is a private limited company engaged in the manufacture of combustible paper cartridge cases for use of the defence force. On April 15, 1999 the petitioner-company entered into an agreement with another company by name Mas Combustible Pack Ltd. (MCP), Cherthala, with its factory at Hyderabad for providing technology for production of combustible cartridge cases (CCC) and to help continuously by undertaking the repairs and maintenance required for machinery of the said company. Petitioner-company has also agreed to depute suitable personnel to MCP factory at Hyderabad for supervising uninterrupted production of CCC. Petitioner-company is entitled for 5 per cent of the sales turnover of CCC towards remuneration for the services rendered. An agreement to that effect was executed on April 15, 1999 between the petitioner-company and Mas Combustible Pack Ltd. Pursuant to the agreement petitioner-company had deputed its personnels to the Hyderabad factory of Mas Combustible Pack Ltd., for providing technical know-how and also for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rishna Plastics [2002] 128 STC 39. Levy of tax on royalty received was however sustained and held that the amount received for providing technology was liable to tax. Aggrieved by the order of the appellate authority dated May 17, 2003 petitioner took up the matter in appeal before the Tribunal. Revenue also filed second appeal before the Tribunal against deletion of the addition made in the assessment order by the first appellate authority. Petitioner raised an additional ground before the Tribunal stating that technical know-how unless incorporated in a tangible media and transferred, cannot constitute goods for the purpose of levy of sales tax and therefore not exigible to sales tax. Tribunal rejected that contention and held that the amount of royalty received can be subjected to tax. Regarding the addition of Rs. 1 lakh made to the conceded turnover with corresponding addition of Rs. 70,000 under section 5A of the Act, the Tribunal found that the said addition was justified because non-maintenance of manufacturing account is a ground to sustain the addition and therefore the deletion of the same by the first appellate authority was held to be not in order. Consequently, additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o manufacture of combustible cartridge casings to the party of the second part at the rate to be approved by both the parties. 5.. It is also confirmed that the party of the first part shall manufacture and sell/repair the machinery required for the manufacture of CCC by the party of the second part at a rate to be approved by both the parties. 6.. The amount payable by the party of the second part to the party of the first part shall be settled at least on a yearly basis, otherwise the party of the first part shall be at liberty to stop all the assistance and technical support to be provided to the party of the second part as per this agreement. Counsel for the revision petitioner placing reliance on the above mentioned agreement submitted that there was no transfer of technical know-how to Mas Combustible Pack Ltd., for manufacture of CCC. But the agreement was for offering the technology required for the production of CCC and to help continuously by providing the required technical details for undertaking repairs and maintenance required to the machinery by deputing suitable personnel so as to have uninterrupted production. 8.. The agreement in our view speaks for itself. Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) whose total turnover for a year is not less than two lakh rupees and every casual trader or agent of a non-resident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover for that year, (i) in the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedules; (ii)................... (iii) in the case of transfer of the right to use any goods for any purpose (whether or not for a specified period) at the rate of eight per cent at all points of such transfer; (iv)(a) in the case of transfer of goods involved in the execution of works contract where transfer is in the form of goods at the rates and at the points specified against such goods in the First, Second or Fifth Schedule; (b) in the case of transfer of goods involved in the execution of works contract (where the transfer is not in the form of goods but in some other form) specified in the Fourth Schedule, at the rate specified against such contract in the said Schedule: Provided that no tax is payable in respect of the turnover of goods the transfer of which was effected without any processing or manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed. The term goods used in the Kerala General Sales Tax Act has got a broad and wide meaning. Goods have been defined to mean all kinds of movable properties except those specified, namely, newspapers, actionable claims, stocks, shares, etc. Goods which are capable of being abstracted, consumed and used and/or transmitted, transferred, delivered, stored or possessed, etc., are goods for the purposes of sales tax. Technical know-how can also be transmitted, transferred, delivered, stored or possessed, etc. Agreement would definitely indicate that there is a transfer of technology for the manufacture of CCC deputing personnel for consideration, i.e., through human media. Transfer of technology in any manner either through floppy disc, CD or through deputing personnel, etc., would constitute sale within the meaning of section 2(xxi) of the Kerala General Sales Tax Act. 9.. We may in this connection refer to the judgment of the Supreme Court in Associated Cement Companies Ltd. v. Commissioner of Customs [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tware programmes contain all these characteristics. It is relevant to refer to the dictum laid down by the Supreme Court which is extracted below: In our view, the term 'goods' as used in article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); (2001) 4 SCC 593. A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become 'goods'. We see no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/ CD or a sale of a film on a video cassette/CD. In all such ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
