|
Type of Software |
Nature of Software |
Delivery Mode |
Control & Possession Transfer / Transfer of Right to use |
Service |
Not a Service (i.e. Goods) |
Declared Service (Section 66E of Finance Act, 1994) |
|
Application Based Software |
General Purpose Software’s which are made for specific class of customers like Tally, MS-word etc. |
Canned & Un-canned |
Yes |
r |
a |
Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods. (Entry No. 6) |
|
No |
a |
r |
||||
|
Tailor Made Software |
It is software that is specially developed for some specific organization or other user on their specification and requirements like ERP, Payroll software etc. |
Canned & Un-canned |
Yes |
a |
a |
Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software (Entry No. 4) |
|
No |
a |
r |
As per the judgement of Tata Consultancy Services Vs State of Andhra Pradesh[2002(178) E.L.T.22(SC)], software sold in canned form is a good and chargeable to VAT. So its advisable to pay VAT and Service tax both in case of canned software irrespective of the service tax applicability. However it’s against the law of mutuality but to on safer side I am in view that both taxes should be paid to avoid any litigation in future.
- Canned Software – Software which is put on Media& sold off the shelf.
- Uncanned Software – Software which is not canned software sold in Media like online transfer.
