1. Whether Software supplied qualifies to be treated as Computer Software resulting in supply of goods?

PJ/Case Law/2020-2021/3567

M/s Solize India Technologies Private Limited (AAR Karnataka) KAR ADRG 25/2020 dated 23.04.2020
Brief Facts: The applicant is engaged in purchase of Software from their partner and supplies the same to the customers. The software is used for designing, validating, manufacturing the parts in industries like Automotive, defence, Aerospace etc. and the main customer base is Government departments, public funded research institutions and public sector undertakings.
Issue:

Whether Software supplied qualifies to be treated as Computer Software resulting in supply of goods?
Whether the benefits of Notification No.’s 45/2017-Central Tax (Rate) and 47/2017-Integrsted Tax (Rate) dated 14.11.2017 is applicable to the supplies made to the institutions given in the notification

Applicant’s Contention:The applicant contends that he purchases the off-the-shelf software which is not developed for any specific client and the same software is sold to all the clients. Hence it is a pre-developed or pre designed software and made available through the use of encryption keys and hence it satisfies all the conditions that are required to be satisfied to cover them under the definition of "goods”. The goods supplied are covered under the HSN 8523.
The Notification No.45/2017- Central Tax (Rate) dated 14th November, 2017 is verified and the said Notification states that the supply of goods are liable to tax at 2.5% CGST when such goods are supplied to the institutions as specified in the column (2) of the said Notification subject to the conditions as specified in the column (3) of the said Notification. The Entry No. 1 of the said Notification reads as under:

S. No.	Name of the Institutions	Description of the goods	Conditions
1	Public funded research institution other than a hospital or a University or an Indian Institute of Technology or Indian Institute of Science, Bangalore or a National Institute Technology/ Regional Engineering College	(a) Scientific and technical instruments, apparatus, equipment (including computers); (b) accessories, parts, consumables and live animals (experimental purpose); (c) computer software, Compact Disc-Read Only Memory (CD-ROM), recorded magnetic tapes, microfilms, microfiches; (d)Prototypes, the aggregate value of prototypes received by an institution does not exceed fifty thousand rupees in financial year.	(i) The goods are supplied to or for – (a) a public funded research institution under the administrative control of the Department of Space or Department of Atomic Energy or the Defence Research Development Organisation of the Government of India and such institution produces a certificate to that effect from an officer not below the rank of the Deputy Secretary to the Government of India or the Deputy Secretary to the State Government or the Deputy Secretary in the Union Territory in the concerned department to the supplier at the time of supply of the specified goods; or (b) an institution registered with the Government of India in the 2 Department of Scientific and Research and such institution produces a certificate from an officer not below the rank of the Deputy Secretary to the Government of India or the Deputy Secretary to the State Government or the Deputy Secretary in the Union territory in concerned department to the supplier at the time of supply of the specified goods; (ii) The institution produces, at the time of supply, a certificate to the supplier from the Head of the Institution, in each case, certifying that the said goods are required for research purposes only; (iii) In the case of supply of live animals for experimental purposes, the institution produces, at the time of supply, a certificate to the supplier from the Head of the Institution that the live animals are required for research purposes and enclose a no objection certificate issued by the Committee for the Purpose of Control and Supervision of Experiments on Animals.

Computer Software falls under Column 2 of the table above.

Reasoning of Judgement: It is held by the advance ruling that the supply of software supplied by the applicant which is not designed and developed specific to any customer and sold without any customisation, qualifies as "supply of goods" and "supply of computer software as goods".
Further the benefits of Notifications No.45/2017-Central Tax (Rate) and Notification No.47/2017-Integrated Tax (Rate) both dated 14.11.2017 are applicable to the supplies made if the same are made to recipients if they are covered under Column (2) and if the conditions as specified in Column (4) of the said Notifications.
Comment:-Distinguishing software as goods and services has always been a matter of concern in the pre GST era. So the applicant has stated the decision in the case of M/s Tata Consultancy services V/s state of Andhra Pradesh in order to support his contention that the software dealt by him is Goods. Further the AAR has said that the concessional benefit of rate shall be applicable only when the supply is made to the institutions specified in Column 2 and conditions mentioned in Column 4 of the above table as specified in the notifications are being satisfied.
Prepared By- Akanksha Bohra

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PJ/Case Law/2020-2021/3567

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