Document Fragment View

Matching Fragments

• The bug removal facility is provided free of charge during the warranty period and commences on the date of installation. • The Annual maintenance cost will be charged at the rate of 20% of the total order value. (emphasis supplied)

11. Apart from the summarised version above, we have also perused the agreement provided in the appeal records. It can be seen from a perusal of the agreement as a whole that the solution which the appellant provides is a software solution. The solution is to meet the specified business requirements of the client. The solution is to be made available in the customer/client's system as per the deliverables indicated in the delivery schedule. Such customisation required to integrate with the existing legacy/ERP system, includes all activities such as installation, training and enhancements to the standard product by change of source code. Thus, it is evident from the agreement that the solution that the appellant provides is in the form of the appellant's product, i.e., the software which it customises as per the client's requirements, including making changes in the source code as required. It is also clear from the agreement that while the intellectual property rights of all the products of the appellant that is ST/41714/15 implemented/used for developing and providing the solution to the client belongs to the appellant, nevertheless, the client is put in full control and possession of the appellant's product, i.e. the customised software, so delivered with its exclusive right to use. That the itemisation has been made in the invoice doesn't detract from the fact that the parties were ad idem as to the aforementioned transactions stated in the agreement and it is not in dispute that such solution by way of customised software has been delivered to the client as indicated in the agreement for the client's use. The appellant has also stated that the appellant's implementation team would carry the product CD to the customer's place and install the software on the customer's hardware recommended/suitable for the software to run and that the CD will give a permanent licence to the customer to use appellant's product for the specified licence users and that the licence fee is a one time fee for the software product. In these circumstances, in our view, the transaction between the appellant and its customer in terms of this agreement has resulted in sale of the appellants' software along with the right to use such software and the licence fee for the same has therefore been rightly made exigible to sales tax by the appellant and cannot therefore be yet again subjected to levy of service tax. Payment of service tax as well as VAT are mutually exclusive. The Judgement in Imagic Creative Pvt Ltd v. CCT, 2008 (9) STR 337 (SC) refers.