Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

The State of Karnataka Versus IBM India Private Limited Formerly Known As M/s. IBM India Ltd.

Levy of VAT - transfer of goods or not - integration process of the developed ERP software is undertaken by the assessee by deputing ERP implementation team to render ERP implementation service - tribunal observed that activities of business consultancy services and implementation of the Enterprises Re-source Planning software as pure services not involving any sale of goods or any transfer of property in goods in the execution of works contract - Held that:- Integration process of the developed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

team with the skill ensures that the ERP software is appropriately integrated in the system of the client. In the process the experts will take all necessary steps to provide functional data for the installation of the ERP software and it becomes useful for the client. In the process there is no transfer of any goods involved. Unless the goods is in existence and deliverable so that the right in the goods is transferred, VAT is not attracted. There is no marketable commodity in existence to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that view of the matter, we do not see any merits in this revision petition - Decided against Revenue. - STRP No. 215/2011 - Dated:- 18-9-2015 - N. Kumar And B. Manohar, JJ. For the Petitioner : By Prof Ravivarma Kumar, Adv. General, along with Sri K M, Shivayogiswamy, Govt. Adv For the Respondents : Sri Madhavarao, For Smt Vani H, Advs ORDER The revenue has preferred this Revision Petition against the order passed by the Karnataka Appellate Tribunal deleting the levy of tax under KST Act and h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he declared turnover. The reassessment proceedings were initiated by the assessing authority noticing that there was under-assessment in the order concluded on 23.11.2006 and, therefore, passed the re-assessment order on 27.2.2008. The assessee preferred a Writ Petition in W.P.No. 5028/2008 before this Court challenging the re-assessment order. By an order dated 27.3.2008 the Writ Petition was partly allowed by setting aside the re-assessment order and remitting the matter to the assessing autho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the said order, the assessee preferred a second appeal before the Karnataka Appellate Tribunal in STA No. 943/2009. The Tribunal has passed the impugned order on 9.12.2010 setting aside the order passed by the assessing authority as well as the first Appellate Authority and setting aside the levy of tax on the activities of business consultancy services and Enterprises Re-source Planning software holding that the said activities are pure services not involving any sale of goods or any transfer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le or deemed sale in the course of execution of works contract? (2) Whether the Karnataka Appellate Tribunal is right in setting aside the orders passed by the Assessing Authority - the First Appellate Authority holding that the ERP software implementation and BCS services of the respondent does not fall within the ambit of "sale" as defined under the KST Act? (3) Whether the services of software developed as per the requirements of the customers on the basic software is development of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

request of the customers and then conduct Business Process Review (hereinafter for short referred to as 'BPR') under Business Consultancy Services (hereinafter for short referred to as 'BCS') programme, and identify and recommend a suitable ERP (Enterprise Resource Planning) software to the customer. Then the necessary ERP software is purchased by the customer, on the result of the BPR performed by the assessee. The customer purchases the software from software vendor and then th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ware is purchased by the client such software needs to be installed, integrated and implemented at the client's end. The installation of ERP software is performed by the project implementation team comprising of the personnel of the assessee company, along with the employees of the client. The members of the ERP software implementation team of the assessee play various roles in the ERP software implementation process depending on their skills. The team with the skill ensures that the ERP sof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s and no transfer of property in goods is involved. Service tax on ERP implementation services (which is attracted with effect from 16.5.2008) has been paid on such services. BCS does not involve transfer of property in goods. Service tax is also paid on BCS receipts. In both only the service is provided and these two services involve no transfer of property in goods. 7. Prof. Ravivarma Kumar, the learned Advocate General, relying on clause 2 of the agreement which deals with deliverable materia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g the specific provision in the agreement is erroneous and requires to be set aside. He further submitted that the agreement for providing service on which reliance is placed by the assessee includes code writing involvement. The said code writing constitutes sale of software which is exigible to tax under the provisions of the Act if the assessee is terming this transaction as services. Further, he pointed out the letter dated 19.06.2008 of the assessee which shows that they are involved in dev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ls are not marketable. They are not goods available in the market. It is client specific and they intend making the Baan ERP functional to meet the requirements of the client. As the ownership of these deliverables vest with the client, in order to see that he does not prevent them from using that knowledge while attending to other clients, these clauses 2.2, 2.21 are entered into. Otherwise, there was no necessity to introduce those clauses. He further submits that the entire consideration rece .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y have admitted by their letter 25% represents the sale is concerned, he submits when they were called upon to state what portion of the said consideration relates to the contract in ERP implementation they have answered by saying '25%'. It is not a payment which represents the sale price. The Tribunal on consideration of the entire material on record has recorded a finding of fact that, whether tangible or intangible, there cannot be a sale or works contract. Unless the said finding is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the client is loaded to the system of the client to install the same. In this process certain codification are made to the client's software, so that the client's system accepts it and that codification is done to the existing system of the client and no new software is developed. It held that software cannot be developed without following the 10 stages as referred to in the written submission of the learned State representative. In the instant case such a process of developing software .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to others. There are a variety of branded software relating to ERP in the market. SAP software is one such. Such software is not designed exclusively for use by a particular type of enterprise/business. Such software is designed to use by a large variety of different types of enterprises. By its very nature such a software needs to be made suitable for use by the concerned purchaser of such software. To do so, the software has built in gaps which are in the nature of virtual switches. Where ce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dard software. The writing up of a code and insertion thereof in the existing gaps in the branded software is all that is done by the assessee's employees in the course of implementation of ERP software. The job description exists of what the assessee is required to do with the software already purchased by the concerned customer. User rights over that software vest in the customer. The codes which the assessee's professionals insert in that software are not proprietary codes having a ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ware already purchased by him. In the instant case, the customer does not have goods in the form of a branded ERP software purchased from the market which is embedded in a tangible medium like a C.D. But unless what the assessee adds or accretes thereto are also having the attributes of goods on the basis of the criteria laid down by the Supreme Court in the case of TATA CONSULTANCY SERVICES VS. STATE OF A.P. reported in (2005) 1 SCC 308, it is inconceivable that a works contract involving trans .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oftware installed could be deleted at a click of button needs to be considered at this juncture. There is no marketable commodity in existence to be sold and unless such commodity whether tangible or intangible exists there cannot be a sale or works contract. Therefore, they proceeded to set aside the order passed by the lower authorities and granted the relief. 11. In this regard this Court had an occasion to consider almost identical issue in the matter which was heard along with this Revision .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oftware is put on the media and delivered by way of transfer of right to use, will also be goods and is liable to VAT. In the case of customized software, the customized portion is embedded to the original software so as to become the customized software, the copyright of the entire software including the customized portion is exclusively owned by the developer of the software. Therefore, in both packaged and customized software, where copyright is held by the developer of software and the copyr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

omer, as it is developed, and the developer of the software does not retain any copyright in such software. In such a situation, since there is no transfer of property in goods and what is provided is only a pure service, there can be no liability to VAT. The consideration in such cases is liable only to service tax. 26. In the case of Annual Technical Support (ATS), if the agreement of the contract includes the annual maintenance involving both service and issuing upgraded or enhanced software, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ementation process is a pure service rendition and does not involve any transfer of property. If any source coding or scripting is done during the process of implementation, the ownership or copyright or any proprietary right would not vest with the software developer. It works purely as a hired labour. The ownership vests at all point of time with the employer who had issued the assignment. In those circumstances, since there is no transfer of ownership or the licence to use the software (deeme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnel but also along with the employees of the client. The members of the ERP Software implementation team of the assessee play various roles in the ERP software implementation process depending on their skills. The team with the skill ensures that the ERP software is appropriately integrated in the system of the client. In the process the experts will take all necessary steps to provide functional data for the installation of the ERP software and it becomes useful for the client. In the process .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector reg.

Forum: transfer of shares

Forum: Input tax credit

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Forum: Input credit of gst paid on urd

Forum: 3B mistake

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

Forum: GST return filing software online | Easy GST compliance management

Forum: Excise duty credit on finished stock at additional place of business.

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish

Article: WHEN CAN ONE TAKE ITC FOR RCM CASES?



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version