St + vat charged on software (microsoft)

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This query is : Resolved

AP Singh (Querist)

16 February 2017 Dear Sir,

We are resellers of Microsoft Software (E-Licenses). We are billed by the distributor and further we bill to the customer. Distributor charge us ST and VAT both on the software as it is service and product both. We have checked it is the same way in other part of the country. however once of our client has marked a mail mentioning that

"Under Section 93 of the finance Act,1994,so much of the value is exempt from taxable service
As is equal to the value of goods and materials sold by the service provider.
(Notification no.12/2003 ST dtd.20/06/2003 effective from 01/07/2003.

If service tax is not leviable,then as per Notification no.12/2008 CE dtd.01/03/2008 read with notification no.
49/2006-CE dtd.30/12/2006 Excise duty at the rate of 12% is applicable on off the shelf software under tariff heading 8523.

As S4U does not have excisable turnover so the excise duty is also not applicable."

Please suggest need your help

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

16 February 2017 The software is fully covered under service tax, as no material supply is involved. VAT is also applicable.
Service tax and VAT both applicable on food supplied in AC restaurant. Abatement is given for material portion in food supplied while levying service tax.
No material content on software supply hence no abatement.

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