Order Date – 04 December 2023

Parties: Advaced Sys Tek Pvt Ltd Vs C.S.T.-Service Tax, Vadodara-II

Facts –

• The Appellant, Advaced Sys Tek Pvt Ltd, had developed Smart Terminal Software (STM) for comprehensive terminal automation which they had supplied for operating the above equipment supplied by them. The appellants have also occasionally supplied bought out standard software such as Oracle/ MS Windows etc to be installed on the peripherals supplied as part of the above equipment supplied by them.
• The appellants have discharged CST/ VAT on sale of such software and no Service tax was paid there on. Accordingly service tax was demanded on the same.

Issue –

• Whether the value of the bought out software is includable in the value for the purpose of discharge of service tax?

Order –

• The Tribunal observed that no separate order for the bought out softwares was placed by the clients and no separate invoice for the bought out softwares was made by the appellants.
• The Tribunal relied on the decision of Hon’ble Apex court in the case of Quickheal Technologies Ltd. reported in 2022 (63) GSTL 385 (SC), it was held that  “Once a lump sum has been charged for the sale of CD (as in the case on hand) and sale tax has been paid thereon, the revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that the updates are being provided.”
• Hence it was held that when such software is supplied (preloaded) in a medium like hardware in the instant case, the same cannot be treated as provision of service. The said supply would amount to sale of goods. Thus the demand of service tax on the value of bought out software by the appellant cannot be sustained. The demand to that extent is set aside. Appeal is allowed.