The Hindu Business Line : Repair, servicing of computer software to attract service tax

THE Finance Ministry has said that maintenance, repair or servicing of all computer software would be subjected to service tax. It has issued a draft circular to this effect.

The draft circular was issued following the decision of the Supreme Court in the Tata Consultancy Services vs State of Andhra Pradesh case. In this case, the Supreme Court had said that sale of computer software falls within the scope of sale of goods. As far as branded software (canned software) sold off the shelf is concerned, the draft circular highlighted that the Supreme Court had categorically decided that such cases fell within the definition of goods.

As regards unbranded/customised software, the draft circular said the supplier develops the programs and generally transfers them into a media, and thereafter it is taken to the customer's premises and loaded in their system. The revenue department noted that in this case too the software is incorporated in a media for use. It also highlighted that the Supreme Court had held that computer software in a media should be categorised as goods.

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Repair, servicing of computer software to attract service tax