Pre-developed and Pre-designed Computer Software can be Treated as ‘Goods’ and attracts 5% GST: AAR

Pre-developed - Pre-designed - Computer Software - Goods - Attracts - 5% GST - AAR - Taxscan

The Karnataka Authority for Progress Ruling has held that pre-designed and pre-intended Laptop or computer Software can be addressed as items and attracts 5% GST.

The applicant, M/s Keysight Systems India Pvt. Ltd are engaged in the offer of scientific and specialized gear and time based and perpetual application licence to General public Funded Investigation Institutions recognized by Govt of India that in some scenarios they source machines alongside with software and in some other conditions they offer standalone software package. All the program irrespective of whether embedded in product or service or downloaded from web site of the applicant, necessitates a licence to be activated as a result of a licence important.

The applicant approached the Advance Ruling Authority for clarifying that whether the Laptop Application supplied by the applicant qualifies to be addressed as ‘goods’ and protected Notification No: 45/2017 IGST and as a result, the concessional GST amount of 5% is relevant.

The applicant by relying the determination of Supreme Court docket in the scenario of Tata Consultancy Assistance Vs.  State of AP submitted that their provide of application licence qualifies to be “Supply of Goods” on the grounds that as per the explanatory notes to the plan of classification of solutions the SAC 997331 excludes the providers of limited close-person licence as part of packaged software program. The applicant even more submitted that the stated offer is entitled for concessional charge of GST at 5% in terms of the Notification No: 45/2017.

The Authority observed that the software package equipped by the applicant is pre-developed and pre-created software package and created readily available by the use of encryption keys and consequently it satisfies all situation of the definition ‘goods’. Additional noticed that products which are equipped by the applicant are unable to be applied with no the help of the pc and has to be loaded on a pc and then after activation would turn into usable and as a result the products provided qualifies to be “Computer Software” and extra especially address below “Application Software”.

The Coram of Dr. M. P. Ravi Prasad and T. Kiran Reddy has held that “the software equipped by the applicant qualifies to be Computer system ensuing in offer of ‘goods’ and the gain of Notification No: 45/2017 are relevant to the computer system software equipped by the applicant to the institutions supplied in the notification, subject matter to fulfillment of the ailment of the notification, in every single circumstance”.

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In Re:M/s. Keysight Systems India Pvt Ltd

Quotation:   2022 TAXSCAN (AAR) 169