The Karnataka Authority for Advance Ruling has ruled that pre-developed and pre-designed Computer Software can be seen as goods and shall be levied with 5% GST.
The petitioner, M/s Keysight Technologies India Pvt. Ltd. is involved in the supply of the scientific and the technical equipment and the time based and the perpetual software license to the Public Funded Research Institutions recognized by the Government of India; in some of the cases they used to supply the equipment as well as the software and in some additional cases they used to furnish the standalone software. All the software whether inserted in the product or downloaded from the website of the petitioner needs a license to be activated via license key.
The petitioner goes to the Advance Ruling Authority towards explaining whether the Computer Software supplied by the petitioner is entitled to be treated as ‘goods’ and covered Notification No: 45/2017 IGST and consequently, the concessional GST rate of 5% is applicable.
The applicant depends on the decision of the Supreme Court in the case of Tata Consultancy Service Vs. The state of AP mentioned that their supply of the software license comes beneath the “Supply of Goods” on the basis of the explanatory notes to the scheme of classification of services the SAC 997331 not including the services of limited end-user licence as part of packaged software. The petitioner mentioned that the mentioned supply qualified for a concessional rate of GST at 5% in terms of the Notification No: 45/2017.
The council sees that the software supplied by the petitioner is pre-developed and pre-designed software and made available via the use of the encryption keys and thus it satisfies all the conditions of the definition of the goods. Moreover, it seems that the goods which are furnished by the petitioner would not be used without the help of the computer and needs to be loaded on the computer and then post to the activation will become useable and thus the goods supplied entitled to be “Computer Software” and particularly comes beneath “Application Software”.
“The Coram of Dr. M. P. Ravi Prasad and T. Kiran Reddy mentioned that the software supplied by the applicant qualifies to be Computer resulting in supply of ‘goods’ and the benefit of Notification No: 45/2017 are applicable to the computer software supplied by the applicant to the institutions given in the notification, subject to fulfillment of the condition of the notification, in each case.”
