Page 75 - GSTL_3rd September 2020_Vol 40_Part 1

2020 ] TATA CONSULTANCY SERVICES v. COMMISSIONER OF TRADE TAX, U.P. 9
3. In respect of the canned software the Commercial Tax Officer, Hydera-
bad, passed a provisional Order of assessment under the provisions of the
Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called ‘the said
Act’) holding that the software were goods. The Commercial Tax Officer
accordingly levied sales tax on this software. The Appellate Deputy Com-
missioner of Commercial Taxes also held that the software were goods and
liable to tax. However, the matter was remanded back for purposes of
working out the tax.
5. The question raised in this Appeal is whether the canned software sold
by the appellants can be termed to be “goods” and as such assessable to
sales tax under the said Act.
27. In our view, the term “goods” as used in Article 366(12) of the Consti-
tution of India and as defined under the said Act is very wide and include
all types of movable properties, whether those properties be tangible or in-
tangible. We are in complete agreement with the observations made by this
Court in Associated Cement Companies Ltd. (supra). A software programme
may consist of various commands which enable the computer to perform a
designated task. The copyright in that programme may remain with the
originator of the programme. But the moment copies are made and market-
ed, it becomes goods, which are susceptible to sales tax. Even intellectual
property, once it is put on to a media, whether it be in the form of books or
canvas (in case of painting) or computer discs or cassettes, and marketed
would become “goods”. We see no difference between a sale of a software
program on a CD/floppy disc from a sale of music on a cassette/CD or a
sale of a film on a video cassette/CD. In all such cases, the intellectual
property has been incorporated on a media for purposes of transfer. Sale is
not just of the media which by itself has very little value. The software and
the media cannot be split up. What the buyer purchases and pays for is not
the disc or the CD. As in the case of paintings or books or music or films the
buyer is purchasing the intellectual property and not the media i.e. the pa-
per or cassette or disc or CD. Thus a transaction sale of computer software
is clearly a sale of “goods” within the meaning of the term as defined in the
said Act. The term “all materials, articles and commodities” includes both
tangible and intangible/incorporeal property which is capable of abstrac-
tion, consumption and use and which can be transmitted, transferred, de-
livered, stored, possessed etc. The software programmes have all these at-
tributes.
29. Mr. Sorabjee submitted that the High Court correctly held that un-
branded software was “undoubtedly intellectual property”. Mr. Sorabjee
submitted that the High Court fell in error in making a distinction between
branded and unbranded software and erred in holding that branded soft-
ware was “goods”. We are in agreement with Mr. Sorabjee when he con-
tends that there is no distinction between branded and unbranded soft-
ware. However, we find no error in the High Court holding that branded
software is goods. In both cases, the software is capable of being abstracted,
consumed and use. In both cases the software can be transmitted, trans-
ferred, delivered, stored, possessed etc. Thus even unbranded software,
when it is marketed/sold, may be goods. We, however, are not dealing
with this aspect and express no opinion thereon because in case of un-
branded software other questions like situs of contract of sale and/or
whether the contract is a service contract may arise.”
19. He further relied upon the judgments in the case of Sasken Commu-
nication Technologies Ltd. (supra). The relevant paragraph Nos. 12, 19, 29, 31, 37,
39, 43, 44 and 50 of the said judgment reads as under :
12. The Apex Court after holding that even unbranded software when it is
marketed/sold, may be goods, made it very clear that, in the aforesaid de-
cision, they are not dealing with this aspect and expressed no opinion be-
GST LAW TIMES  3rd September 2020  91