Supply Of Software Amounts To Sale Of Goods, Service Tax Demand Not Sustainable: CESTAT

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the supply of software amounts to the sale of goods, and the service tax demand is not sustainable.The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the appellant has developed smart terminal software (STM) for comprehensive terminal automation, which they have supplied for operating the equipment supplied by them. The appellants have also occasionally supplied bought-out standard software such as Oracle, MS Windows, etc. to be installed on the peripherals supplied as part of the above equipment supplied by them. The appellants have discharged CST/VAT on the sale of such software, and no service tax was paid.The appellant/assessee is in the business of supplying “batch controller flow measuring instruments." Appropriate Central Excise duty on manufactured components cleared as well as appropriate CST/VAT on entire goods sales made, was discharged by the appellant. The appellant had developed Smart Terminal Software (STM) for comprehensive terminal automation, which they had supplied for operating the above equipment. The appellants were required to supply bought-out standard software such as Oracle, MS Windows, etc. to be installed on the peripherals supplied as part of the above system.The appellants used to invariably pay applicable CST or VAT on the sale of such software, and no service tax was paid thereon. Since the software was invariably supplied on appropriate mediums, i.e., hard drives and other equipment, it constitutes "goods," and therefore, it does not attract a service tax.The appellants did not contest the service tax already paid on STM Software. The contest is on the inclusion of the value of bought-out software supplied to the clients along with STM software in the assessable value.The assessee contended that the software supplied by them construed goods and did not attract a service tax levy.The tribunal held that when such software is supplied (preloaded) in a medium like hardware, it cannot be treated as a provision of service. The supply would amount to the sale of goods.Counsel For Appellant: Saurabh DixitCounsel For Respondent: R.R. KurupCase Title: Advanced Sys Tek Pvt. Ltd. Versus C.S.T.-Service Tax, Vadodara-IICase No.: Service Tax Appeal No. 11679 of 2016Click Here To Read The Order

Supply Of Software Amounts To Sale Of Goods, Service Tax Demand Not Sustainable: CESTAT

Mariya Paliwala

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Mariya Paliwala

Supply Of Software Amounts To Sale Of Goods, Service Tax Demand Not Sustainable: CESTAT

Mariya Paliwala

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INR 1099+GST

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Mariya Paliwala

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