Information Technology Software - Total Confusion!
NOTIFICATION No. , dated 27.02.2010, exempted the service of providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products , subject to certain conditions. Now this notification is rescinded.
Notification No. ; Dated December 21, 2010
Notification No. , dated 27.02.2010, exempted the service providing packaged or canned software, intended for single use and packed accordingly from the whole of service tax, subject to certain conditions. – This notification is also rescinded.
Notification No. ; Dated December 21, 2010
Now this does not mean that these services are no more exempted. The Government has brought back these exemptions after many clarifications and avoidable confusion.
The new exemption notification stipulates that
++ the value of the goods shall be determined under section 4A of the Central Excise Act – Retail sale Price.
++ Appropriate excise duty has been paid on software manufactured in India and the appropriate duties of customs including the additional duty of customs on such value, have been paid by the importer in respect of software which has been imported into India.
The moot point is why the value of canned/packaged software should be determined in terms of section 4A of the Central Excise Act, 1944 when it is not one of the notified goods in terms of that section (please refer Notification No.49/2008-CE(NT) dated December 24, 2008). Can a notification under service tax law override the provisions of section 4A of Central Excise Act, 1944 and stipulate that the duty shall be payable on such items in terms of section 4A by virtue of a service tax notification? Where are we heading to?
Notification No. ; Dated December 21, 2010