THE Government has said that maintenance, repair or servicing of computer software would attract service tax. A circular to this effect has been issued on Friday, a senior Finance Ministry official said.
With the issuance of this circular, the earlier draft circular on the same has been withdrawn. The circular has been issued after taking into account the decision of the Supreme Court in the Tata Consultancy Services vs State of Andhra Pradesh case.
The Supreme Court had in this case observed that all the tests required to satisfy the definition of goods are possible in the case of software. It also said that in computer software the intellectual property has been incorporated on media for the purpose of transfer and software and media cannot be split up. Therefore, sale of computer software falls within the scope of sale of goods, the Supreme Court had noted.
Further, the Supreme Court had also observed that it was in agreement with the view that there was no distinction between branded and unbranded software.
With software being considered as goods, the Finance Ministry has said that any service provided in relation to maintenance or repair or servicing of software would attract service tax. This is because `repair or maintenance' of goods has already been brought under the ambit of service tax.
