Page 76 - GSTL_3rd September 2020_Vol 40_Part 1

10 GST LAW TIMES [ Vol. 40
cause in case of unbranded software “whether the contract is a service con-
tract” or “contract of sale is also involved”, may arise. That is precisely the
question that has to be decided in these cases. Therefore, the said judgment
do not come in the way of this Court going into the said question, as the
Supreme Court has not expressed their opinion on the said issue. Therefore,
the field is open.
19. From the aforesaid reasons of the assessing authority, it is clear that
the assessee is in the business of creating complete solutions to his clients.
They have a comprehensive range of applications, services and solutions.
They are a solution providers. They are in the development of software.
Their solutions and services are backed by a proven reputation for expert
support and high quality. The assessee provides solutions and develops
software and the same is carried out on the software of the client company.
The said software developed has to be on a media and then handed over to
the customer. The transfer of property from the technicians of the assessee
to the client constitute sale of goods in terms of the judgment and therefore
liable to sales tax. It is the correctness of the said reasoning and finding
which is assailed in these proceedings.
29. The Apex Court in the case of Imagic Creative (P.) Ltd. v. CCT,
MANU/SC/0518/2008 : (2008) 12 STT 392 held as under :-
28. We have, however, a different problem at hand. The appellant
admittedly is a service provider. When it provides for service, it is
assessable to a tax known as service tax. Such tax is leviable by rea-
son of a parliamentary statute. In the matter of interpretation of a
taxing statute, as also other statutes where the applicability of Arti-
cle 246 of the Constitution of India, read with the Seventh Schedule
thereof is in question, the Court may have to take recourse to vari-
ous theories including “aspect theory” as was noticed by this Court
in Federation of Hotel & Restaurant Assn. of India v. Union of India,
MANU/SC/0180/1989 : (1989) 3 SCC 634.
29. If the submission of Mr. Hegde is accepted in its entirety,
whereas on the one hand, the Central Government would be de-
prived of obtaining any tax whatsoever under the Finance Act,
1994, it is possible to arrive at a conclusion that no tax at all would
be payable as the tax has been held to be an indivisible one. A dis-
tinction must be borne in mind between an indivisible contract and
a composite contract. If in a contract, an element to provide service
is contained, the purport and object for which the Constitution has
to be amended and Clause (29A) had to be inserted in Article 366,
must be kept in mind.
30. We have noticed hereinbefore that a legal fiction is created by
reason of the said provision. Such a legal fiction, as is well known,
should be applied only to the extent for which it was enacted. It,
although must be given its full effect but the same would not mean
that it should be applied beyond a point which was not contemplat-
ed by the Legislature or which would lead to an anomaly or absurd-
ity.
31. The Court, while interpreting a statute, must bear in mind that
the Legislature was supposed to know law and the legislation en-
acted is a reasonable one. The Court must also bear in mind that
where the application of a parliamentary and a legislative Act
comes up for consideration; endeavours shall be made to see that
provisions of both the Acts are made applicable.
32. Payments of service tax as also VAT are mutually exclusive.
Therefore, they should be held to be applicable having regard to the
respective parameters of service tax and the sales tax as envisaged,

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