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(b) The term "software program" has been discussed in the case of Tata Consultancy Services V/s. State of Andhra Pradesh 2 and BSNL & Anr. V/s. Union of India 3 wherein the Supreme Court has defined software as a set of instructions expressed in words, code schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result. Thus, it is a complete code, functioning independently in the computer. In the present case, the above conditions are not satisfied as providing repair/maintenance services for the existing software no goods are brought into existence. Even though the codes/command come into existence they cannot be bought and sold in the market as such. The commands/codes only help in the functioning of the base software as per the requirement of the customer. Therefore, in the absence of complete code of instructions to perform computer operations the set of commands cannot be termed as software;

(c) There can be transactions in case of computer software which do not involve any transfer of property in software (either as a part of a deemed sale or as a result of another sale), but which would involve a person or a dealer providing manpower or technical services for agreed 2 (2004) 137 STC 620 (SC) 3 (2006) 145 STC 91 (SC) Gauri Gaekwad 9/34 MVXA-21-2015.doc consideration (based on man hour or such other basis) to any other dealer or any other person to program/develop software for such other person or dealer at the premises of the former or the latter. In such transactions, the software so developed/programed would be the property of the latter and the former would not have any ownership over such software developed/programed.

The Karnataka Sales Tax Tribunal in the case of IBM India Private Limited, Bangalore V/s. State of Karnataka 4 has held that adding lines of codes into the ERP at places where the ERP software permits such additions/modifications to be made were not held to be software. Similarly, in the present case, the technical services provided by appellant to QAD, i.e., adding of lines of code within the base software itself to fix bug/error, would not amount to software or sale of software;

Even the judgments in the matter of Direction Software Solutions V/s. Income Tax Officer13 and ISBC Consultancy Services Ltd. V/s. Deputy Commissioner of Income Tax14 relied upon by the Tribunal are not applicable to the facts and circumstances of the case. The reliance by the Tribunal on these two decisions is totally misplaced. These were cases where the assessee(s) contended that they had developed software and were entitled to a deduction in terms of Section 10A of the Income Tax Act, 1961 which defined "computer software" to mean inter alia any customised electronic data or any product or service of any similar nature which is 13 (2009) 28 SOT 35 (MUM) (URO) 14 2002 (8) TMI 840 - ITAT MUMBAI Gauri Gaekwad 30/34 MVXA-21-2015.doc transmitted or exported from India to any place outside India by any means. This gives an artificial and extremely broad definition of computer software which cannot be applied in the present case as there is no dispute that download of software is not liable to VAT. In other words, software that is transmitted over the internet is not subject to VAT. These judgments, therefore, could not have been relied upon by the Tribunal in the context of VAT.