For Software Companies VAT or SERVICE TAX?

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Pradeep Puntambekar (Querist)

04 July 2008 Sir,
Our's is a Customised Software Development Company, Till date we are paying Gujarat VAT @4% plus 1%. Now Central Govt Charged 12.36% Service Tax on Customised Software Development Company (Ref : Notification no. 18/2008 - Service Tax w.e.f. 16th May, 2008

Now what we do Either we pay VAT or Service Tax?

And if both are applicable then how can our customer take reimbursement of Tax and on which?

It is unsolved question and no body is clear in this matter. Hope you will guide us correctly.

Thanks

Pradeep P.

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

22 September 2008 In my opinion, development of customised software does not fall under the category of sale/taxable WC, as becuse no transfer of property is being made at any time. I think that your compnay, while developing a software for a specific client is executing of a WC in which no transfer of goods involved at the time of execution.
Hence it is a WC but is out of the ambit of VAT/CST and is purely a subjet matter of Service Tax.

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