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Anti Virus Software falls within the definition of Information Technology Software- Madras HC

M/s.K7 Computing Private Limited v. The Commissioner, .The Commissioner of GST & Central Excise, W.P.Nos.25923 & 31485 of 2018 and WMP.Nos.30125 & 36693 of 2018 - 29.10.2020.

The case was argued before Hon’ble Justice Mr. M.S.Ramesh. The facts of the present case are that the petitioner develops Anti Virus Software in the name of 'K7 Total Security' and 'K7 Anti Virus', which is software for Anti Virus. 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 is under challenge in this writ petition. A writ of certiorari has been filed by the petitioner.

The main issue that,

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 counsel for petitioner argued that petitioner 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 counsel for 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 counsel for respondents relied on the case of InfoTech Software Dealers Association (ISODA) V. Union of India reported in 2010 (20) STR 289 (Mad)

The Court reasoned 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. The petitioner relied on the order of the CESTAT which is not binding on this Court.

Thus it was held by the Court that,

Thus, the petitioner has failed to substantiate that’Anti Virus Software' will not fall within the ambit of the definition of 'Information Technology Software'. While that being so, by applying the ratio of the Hon'ble Division Bench in ISODA (supra), it can be held that 'Information Technology Software' is a 'service' and when the 'Anti Virus Software' of the petitioner would fall within the definition of an 'Information Technology Software', I do not find any infirmity in the action taken by the Department in demanding service tax from the petitioner, through the impugned order” (Para 16)
“Since the petitioner is liable to pay service tax but had 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 has 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” (Para 17)

The writ petition was dismissed.



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