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TMI Blog2020 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, namely, K7 Computing Private Limited, is engaged in Software Development and Supporting Services. The petitioner develops Anti Virus Software in the name of 'K7 Total Security' and 'K7 Anti Virus', which is a software for Anti Virus protection, Antispyware protection, Email Scanner, Firewall and Privacy protection etc. The software is downloadable from the petitioner's website. 3. The demand of service tax of Rs. 4,27,99,059/- payable for the period from July 2012 to March 2013 under Section 73(1) of the Finance Act, 1994 (hereinafter referred to as the 'Act') together with interest and penalty, is under challenge in this Writ Petition. The principal ground raised by the petitioner is that they do not provide any taxable service as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is deemed to be a 'service' and therefore the Department was justified in demanding the service tax for the relevant period. 6. The primary issue that arises for consideration in the present cases is as to whether, an 'Anti Virus Software' would fall within the ambit of the definition of 'Information Technology Software' as defined under Section 65 (53a) of the Finance Act, 1994? 7. The Hon'ble Division Bench of the Madras High Court in ISODA (supra) has held that when the developer of a software retains his copyright and transfers the network subscriber the right to use the software, by way of an End-User Licence Agreement (EULA), it would only amount as a 'service'. It was also held that though the software are goods, when the goods as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 366(29A)(d) of the Constitution of India, there must be a transfer of right to use any goods and when the goods as such is not transferred, the question of deeming sale of goods does not arise and in that sense, the transaction would be only a service and not a sale. 32.The above discussion as to the canned/packaged software or customised software is in respect of the transactions that are prevalent among the software re-sellers and their customers and the discussion is not with reference to any specific transaction. The challenge to the amended provision is only on the ground that the software is goods and all transaction would amount to sales. The said challenge is opposed on the ground that though the software is goods, the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to the order of CESTAT, New Delhi in final order No.50022 of 2020 dated 09.01.2020 in the case of Quick Heal Technologies Ltd., V. Commissioner of Service Tax, New Delhi. The decision of the CESTAT is not binding precedent on this Court and therefore, the petitioner cannot place reliance on the Tribunal's order. 10. Nevertheless, in order to analyse the submission of the learned counsel for the petitioner that 'Anti Virus Software' is not an 'Information Technology Software', it would be appropriate to examine the definition of 'Information Technology Software' as such. For an easy reference, Section 65 (53a) & 65 (105)(zzzze) of the Finance Act, 1994 are extracted hereunder:- 'Section 65 (53a):-"information technology software" me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on computers, mobile phones, data processing machine, sensors, cameras and other such equipments. They provide interactions with the user under the EULA, by providing interactions, configurations and other screens or pages. They are invariably provided to the market in machine readable, executable or binary compilations and exists with the creator or producer in source code or object code forms. They are representation of instructions that include data, sounds and images. 13. The petitioner's 'Anti Virus Software' in CD forms squarely falls within the essential features of the definition of the 'Information Technology Software'. In other words, all essential conditions stipulated under the definition of 'Information Technology Software' ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65 (105) (zzzze) in the Act, one of the ratio decidendi therein, was that, when a transaction takes place between software developer and Information Technology Software customers, it is not the sale of the software but only the contents of the data stored in the software which would only amount to 'service'. 16. Thus, the petitioner has failed to substantiate that an 'Anti Virus Software' will not fall within the ambit of the definition of 'Information Technology Software'. While that being so, by applying the ratio of the Hon'ble Division Bench in ISODA (supra), it can be held that 'Information Technology Software' is a 'service' and when the 'Anti Virus Software' of the petitioner would fall within the definition of an 'Information Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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