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i) On agreement of the assignment with the customer, appellants' implementation team would carry the Product CD to the customer place and install the software on the customer's hardware recommended/suitable for the software to run. The CD will give a permanent license to the customer to use appellants' product for the specified license users. It is a onetime license fee for the software product.

7 During the course of the Audit of the assessee, by the Department they have provided a note on 'Pro-Active Services'. They stated in the note that their Software Division provides tailor made Software solutions for their clients; that they sell these products by sale of its 'License' and charges a 'License Fee' to its clients to use the software., that it raises invoices with appropriate sales tax on sale of its Software License/ implementation' and pays Sales tax.

They also stated that since most of the Software is tailor made to specific requirements of the customers, there customization of the Standard Software and pays service tax on the customization charges collected. They further stated that they are not into off the shelf software products like Tally and that the customers cannot utilize the software without implementation and customization. 8.0 I find that the assessee have entered into "letter of engagement for implementation of Secondary Sales Management for VVD( M/s VV. Dhanushkodi & Sons) dt. 15.7.2008 and an indepth study is made to know the nature of the transaction, being the illustrative model Agreement between the assessee and their clients. As per the letter of engagement the value of the contract is Rs. 15 Lakhs. 8.1 The Executive Summary of the agreement is as follows • VV Dhanushkodi & Sons (VVD) is a leading manufacturer of edible oils like coconut Oil, Sun flower Oil, Gingelly Oil etc. and owns several popular brands like VVD, Arogya etc. All sales ST/41714/15 related activities are carried out by VVD Sales Management Services.

• 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.

81. It is not in dispute that when a program is created it is necessary to encode it, upload the same and thereafter unload it. Indian law, as noticed by my learned Brother, Variava, J., does not make any distinction between tangible property and intangible property. A "goods" may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attributes, the same would be goods. Unlike the American Courts, Supreme Court of India have also not gone into the question of severability." The aforesaid findings of the Supreme Court leave us in no manner of doubt that even a customised software will satisfy the definition of 'goods' for, it is evident that it has the attributes having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and ST/41714/15 possessed. Once the said attributes are seen satisfied in the software in question, then whether the software is treated as customised or noncustomised, it would nevertheless be categorised as 'goods' for the purposes of levy of tax. The said view of the Supreme Court has since been followed in later decisions including a recent decision of the Supreme Court in Commissioner of Service Tax, Delhi v. Quick Heal Technologies Limited - [(2023) 5 SCC 469]. We are therefore of the view that merely because the software developed by the respondent/assessee in the instant case was customised for a particular user and was not sold to other users, the charges collected from the customer cannot escape the levy of sales tax under the KGST Act. This is more so because the mere fact that it was customised for a particular user did not lead to the software ceasing to be goods for the purposes of levy of sales tax. Thus, we allow S.T.Rev.Nos.3, 4 and 7 of 2016, by answering the questions of law raised therein in favour of the Revenue and against the assessee. S.T. Rev. Nos. 2, 5 and 8 of 2016 are dismissed by answering the questions therein in favour of the assessee and against the Revenue." (emphasis supplied)