TMI Blog2023 (2) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh General Sales Tax Act, 1957, holding that the software were goods and accordingly, sales tax was levied thereon. The Supreme Court in TATA CONSULTANCY SERVICES VERSUS STATE OF ANDHRA PRADESH [ 2004 (11) TMI 11 - SUPREME COURT] has held that the test to determine whether a property is goods for purposes of sales tax is not whether the property is tangible or intangible or incorporeal. The test is whether the item concerned is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed etc. Admittedly, in the case of software, both canned and uncanned, all the above attributes are present. Thus, according to the Supreme Court, the word goods as defined in Article 366(12) of the Constitution of India is very wide and includes all types of movable properties, whether those properties be tangible or intangible. In case of software or sale of computer software it is clearly a sale of goods. Even an intellectual property, whether it be in the form of canvas or computer discs or cassettes and marketed, would become goods - Thus, unbranded software when it is marketed/sold may be goods. However, Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in W.P.No.13482 of 2008 the challenge is to the final assessment order dated 12.05.2008 for the assessment period 2006-07 under the CST Act. 4. Both the aforesaid orders have been passed by the Commercial Tax Officer, Punjagutta Circle, Hyderabad (briefly, Commercial Tax Officer hereinafter). Additionally, a prayer has been made to declare Entry 39(14) of Schedule IV of the then Andhra Pradesh Value Added Tax Act, 2005 (briefly, the VAT Act hereinafter) insofar it provides for levying of sales tax on customised Information Technology (IT) software as ultra vires and unconstitutional. Besides, petitioner has sought for a declaration that Section 65(53)(a) read with Section 65(105)(zzzze) of the Finance Act, 1994, is ultra vires and unconstitutional. 5. For the sake of convenience, we will refer to the averments in W.P.No.13482 of 2008. 6. From a perusal of the final assessment order dated 12.05.2008 it is seen that petitioner is a dealer in domestic sales of software and also export sales of software. Business premises of the petitioner was visited by the Commercial Tax Officer on 26.02.2008 for verification of sale invoices and purchase invoices following the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of work. Development of customised software starts from designing, continues through development and implementation and ends with handing over the developed software after successful execution. Therefore, the amount collected from the clients is nothing but sale value of customised software, which is exigible to tax under the VAT Act. 8.1. Though petitioner had contended that it had paid service tax to the consulting engineers or management consultants, Commercial Tax officer opined that Finance Act, 1994, and VAT Act are two different enactments covering different fields. That apart, petitioner did not produce any evidence to prove payment of service tax on the goods sought to be taxed under the CST Act read with the VAT Act. Therefore, Commercial Tax Officer held that the amounts indicated in the show cause notices were liable to be paid by the petitioner and confirmed the same. 9. Aggrieved, the writ petition has been filed. 9.1. This Court by order dated 26.06.2008 had admitted the writ petition for hearing and passed an interim order staying the impugned order dated 12.05.2008 on condition of depositing 50% of the disputed tax within eight weeks. 10. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngible or incorporeal. The test is whether the item concerned is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed, etc. Admittedly in the case of software, both canned and uncanned, all of these are possible. 10.3. Thus, Supreme Court held that the test to determine whether a property is goods for purposes of sales tax is not whether the property is tangible or intangible or incorporeal. The test is whether the item concerned is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed etc. Admittedly, in the case of software, both canned and uncanned, all the above attributes are present. 10.4. Supreme Court referred to the definition of the term goods appearing in Article 366(12) of the Constitution of India and held as follows: 27. In our view, the term goods as used in Article 366(12) of the Constitution and as defined under the said Act is very wide and includes 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 Associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be goods. However, Supreme Court did not express final opinion on this aspect as this was not the issue before it. 11. In our considered opinion, the view taken by the Commercial Tax Officer is in consonance with the view taken by the Supreme Court in Tata Consultancy Services (supra). 12. Learned counsel for the petitioner made a valiant effort to contend that what was being construed to be goods was in fact a service provided by the petitioner and therefore, not exigible to sales tax. In this connection, he has placed reliance on a Division Bench decision of the Karnataka High Court in Sasken Communication Technologies Ltd. v. Joint Commissioner of Commercial Taxes (Appeals)-3 MANU/KA/2245/2011. 13. However, on going through the aforesaid judgment we find that the question which fell for consideration of the Division Bench of the Karnataka High Court was whether a contract for development of a software falls within the mischief of a works contract and whether upon development of the software it is vested with the customer from day one in which event whether it would amount to deemed sale under Article 336(29A)(b) of the Constitution of India? 14. Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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