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Services related to Information Technology Software

Service Tax - Declared Services - 04 - Chapter 4 Effective date: 1.7.2012 Scope of Declared Service - Section 66E (d) Development, Design, Programming, Customisation, Adaptation, Upgradation, Enhancement, Implementation of information technology software Meanings and Definitions: Section 65B(28) - "information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of be .....

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on while excise duty is applicable on sealed packed software which are sold in packed form. Customised software is not liable to excise duty if it is not in a packed or canned form. Same in the case software is developed and it is downloaded through internet on payment of consideration it is held to be taxable under this service. Supply of skilled manpower: Where only skilled personnel including computer engineers were provided to IT companies to work on software projects under their supervisio .....

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otification No. 11/2016-CE and 11/2016-Customs, both dated 1st March 2016 refers) Clarification by the Board (Taxation Guide - Guidance Note -6 - Exemptions dated 20.06.2012) 6.4.1 Would sale of pre-packaged or canned software be included in this entry? No. It is a settled position of law that pre-packaged or canned software which is put on a media is in the nature of goods [Supreme Court judgment in case of Tata Consultancy Services vs State of Andhra Pradesh [2004 (11) TMI 11 - Supreme Court r .....

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eclared list entry relating to information technology software. However, such activities when carried out by a person for another for consideration would fall within the definition of service and hence chargeable to service tax if other requirements of taxability are satisfied. 6.4.4 Would providing a license to use pre-packaged software be a taxable service? The following position of law needs to be appreciated to determine whether a license to use pre-packaged software would be goods- • A .....

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e 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 booksor 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 cases, the intellectual property has been i .....

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defined in the said Act. The term all materials, articles and commodities includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. The software programmes have all these attributes. Therefore, in case a pre-packaged or canned software or shrink wrapped software is sold then the transaction would be in the nature of sale of goods and no service tax would be leviable .....

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s or such transfers which are deemed to be a sale within the meaning of Clause 29(A) of article 366 of the Constitution. The relevant category of deemed sale is transfer of right to use goods contained in sub-clause (d) of clause (29A) of the Constitution. • Transfer of right to use goods is deemed to be a sale under Article 366(29A) of the Constitution of India and transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods is a dec .....

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ch an activity would fall in the ambit of definition of service and also in the declared service category specified in clause (f) of section 66E. • Therefore, if a pre-packaged or canned software is not sold but is transferred under a license to use such software, the terms and conditions of the license to use such software would have to be seen to come to the conclusion as to whether the license to use packaged software involves transfer of right to use such software in the sense the phras .....

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should be such as restraints the right to free enjoyment on the same lines as a person who has otherwise purchased goods is able to have. Any restriction of this kind on transfer of software so licensed would tantamount to such a restraint. • Whether the license to use software is in the paper form or in electronic form makes no material difference to the transaction. • However, the manner in which software is transferred makes material difference to the nature of transaction. If the s .....

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