The Madras High Court held that the Service tax applicable on ‘Anti-Virus Software’ as it falls within the definition of ‘Information Technology Software’.
The petitioner, M/s. K7 Computing Private Limited develops Anti-Virus Software in the name of ‘K7 Total Security’ and ‘K7 Anti-Virus’, which is software for Antivirus.
The demand of service tax of Rs.4, 27, 99,059 payable for the period from July 2012 to March 2013 under Section 73(1) of the Finance Act, 1994 together with interest and penalty which was challenged in the writ petition.
The issue raised in this case was Whether, an Anti-Virus Software would fall within the ambit of the definition of Information Technology Software as defined under Section 65 (53a) of the Finance Act, 1994.
The petitioner argued that he has discharged VAT on the sale of Anti-Virus Software, since it is deemed to be a ‘sale of goods’ and has been duly assessed by the authorities under the Tamil Nadu Value Added Tax Act over the statutory returns filed by them and therefore, the claim of the Department that the transactions rendered by the petitioner is amenable to service tax, cannot be substantiated.
The respondent argued that the petitioner’s Anti-Virus Software is a representation of instructions recorded in a machine-readable form that provides interactivity to the End User through a computer that has working internet connectivity and therefore, Anti-Virus Software squarely falls within the definition of Information Technology Software.
The single judge bench of Justice M.S. Ramesh said that the petitioner’s Anti-Virus Software in CD forms squarely falls within the essential features of the definition of the Information Technology Software.
In other words, all essential conditions stipulated under the definition of Information Technology Software are the essential and salient features of an Anti-Virus Software also.
If that be so, the submissions of the petitioner that an ‘Anti-Virus Software’ is outside the ambit of the definition of an ‘Information Technology Software’ are not based on any ‘Intelligible Differentia.
Thus, the Court held that the petitioner has failed to substantiate that Anti-Virus Software will not fall within the ambit of the definition of ‘Information Technology Software’.
“Since the petitioner is liable to pay service tax but has not discharged the service tax liability, the provisions of Section 68 of the Finance Act, 1994 r/w. Rule 6 of the Service Tax Rules have been violated and therefore, I do not find any infirmity on the part of the Department, in imposing interest under Section 75(i) along with penalty under Section 76(1) of the Finance Act, 1994,” the court said.Subscribe Taxscan AdFree to view the Judgment