Page 80 - GSTL_3rd September 2020_Vol 40_Part 1

14 GST LAW TIMES [ Vol. 40
into a final product which is produced at the project place with the assis-
tance of the staff of service providers. In fact, the material on record dis-
closes that the customers have engaged the services of several service pro-
viders, who have expertise in different fields and all of them put their mind
and hands together and find a solution to the problem of the customer. The
end product, i.e., the ultimate software, is not necessarily the work of any
one such service provider. It is a collective effort. Nobody can claim that the
end product exclusively belongs to them except the customer who has paid
for the service rendered by the various service providers.
50. In the light of the aforesaid discussion, the finding recorded by the as-
sessing authority that the contract in question involves a sale of software
development by the assessee cannot be sustained. It is contrary to the mate-
rial on record, the constitutional provisions and the law declared by the
Apex Court. Accordingly it is hereby set aside.”
20. Sri Tarun Gulati submits that the Apex Court in the case of assessee
arising out of the judgment of the High Court had considered the case of the
branded software and has referred as “canned software”, and held it to be goods
liable to tax but had not expressed any opinion in regard to unbranded software,
but the Tribunal fell into trap and relying upon the said judgment upheld the
order of the assessing authority as well as First Appellate Authority imposing tax
liability on the so called unbranded software. He further emphasized that revion-
ist-assessee himself in its reply to the show cause notice had stated that in view
of the judgment of the Andhra Pradesh High Court the software so developed by
the assessee as per its client specification cannot be termed as goods, amenable to
tax. But, the assessing authority wrongly interpreted the said provision of law
and held otherwise. He further emphaised that the Tribunal also fell in the trap
and wrongly interpreted the judgment of both Andhra Pradesh High Court as
well as the Apex Court in the matter of assessee itself where the issue was in re-
gard to the branded software, which is sold off the shelf and falls within the def-
inition of goods for which the assessee had already paid the tax.
21. He laid stress on the judgment of Karnataka High Court in the case
of Sasken Communication Technologies Ltd. (supra) wherein the Court had held that
when the assessee’s technicians worked at their office or go to the place of client,
carry out the project work and finds solutions and, if at the end of the day, any
software emerges, same is embedded on C.D. and the software so developed
from the inception is the property of the customer. At no point of time the said
software is property of the assessee. Further, it was held that before the software
came into existence, it was the property of the customers as set out in the terms
of the contract, which do not indicate sale of any software and it is clear that the
agreement is a simple service contract.
22. Further, the First Appellate Authority committed error in not allow-
ing the application of the revisionist for the additional grounds in the appeal, as
the assessee can move such application and the same was supported by catena of
judgments of this Court, that as the First Appellate Court is a fact finding Court,
such grounds could have been added by the assessee and the First Appellate Au-
thority committed gross error by not allowing the same. He further submitted
that the assessee by the said application only wanted to add the ground that cer-
tain sales of hardware made to the Public Works Department, which were ex-
empted from the trade tax under Section 3A of the Act, was shown by mistake
under the head of Computer Consultancy Service. He further contended that the
observation of the First Appellate Authority in regard to the contradictory

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