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2020 ] TATA CONSULTANCY SERVICES v. COMMISSIONER OF TRADE TAX, U.P. 17
concerned, the Karnataka High Court held, after considering the agreement and
contract so placed that the agreement was a simple service contract and not cov-
ered under the definition of goods and not amenable to tax.
35. Argument of Sri Gulati as regards the unbranded software, which is
a part of software development and support service for its client is covered un-
der service and not under goods has force and the said fact is in consonance with
the view taken by the Andhra Pradesh High Court as well as the Apex Court in
the case of Tata Consultancy Service (supra). Further, the judgment of Sasken Com-
munication (supra) also in categorical term held such type of software develop-
ment for the client pursuant to the agreement/contract as a service and not
branded goods sold off the shelf, so developed by the assessee.
36. In the present case, it is not disputed that no agreement or contract
was ever filed or brought to the notice of the assessing authority or the appellate
authority by the assessee, despite the show cause notice given by the assessing
authority. Argument of Sri Gulati to the extent that had the assessing authority
called for further information or document, the assessee was ready to furnish the
same does not have much force, as the entire case of the revisionist-assessee rest
upon the fact that software so developed, is on the instructions and specification
of client and after the software is developed it becomes the property of the client
as per the contract or agreement so arrived between them, hence the agree-
ment/contract is the basis of claim of the assessee, relying upon which his case
falls apart from the definition of goods and immediately come within the pur-
view of service.
37. As it is clear that Service Tax and U.P. Trade Tax Act operate in dif-
ferent areas and unless the work contract involves an elements of sale of goods,
the State Legislature has no power to Levy Tax under the said Act. Similarly the
Parliament also has no power to levy Service Tax on the sale of goods, if by in-
cluding in the Finance Act, development of Information Technology Software,
study, analysis, design and programming and various other aspects touching
softwares, if it involves sale of goods. In both the enactments they specify the
type of activity, which are liable for tax. Thus, where any assessee is carrying on
both the work of sale of software and development of software, then the as-
sessing authority has to distinguish and indentify between the two in such a
harmonious way so as to uphold the right of both the Legislation to levy tax,
which falls within their respective area for arriving at such conclusion the as-
sessee is also duty bound, apart from submitting his return to produce such doc-
uments as may be necessary and demanded by the authority concerned to segre-
gate between the two, so as to make it abundantly clear as to which Law i.e. the
State Law or the Central Act will be applicable.
38. In the present case, the moment assessee produces/submits work
contract/agreement before the assessing authority so as to bring his case within
the purview of software development, the case comes out of the purview of the
State Taxing authority and the same becomes amenable to Service Tax under the
Law enacted by the Parliament.
39. Argument raised by Sri Pandey, Learned Standing Counsel has
force to the extent that the assessee-revisionist should have brought on record the
agreement so claimed before the assessing authority so as to substantiate its
claim and the assessee failed to do so, and for the first time the same are being
filed before this Court in the revisional proceedings. The question is whether the
Court can rely upon the agreement so placed under the revisional jurisdiction
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