Online supply of Packaged Software qualifies as Supply of Goods
by ReinHeads Team | May 6, 2020
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Online supply of Packaged Software qualifies as Supply of Goods*
| Facts |
- Solize India Technologies Pvt. Ltd. (‘the Applicant’) purchases packaged software (not tailor-made for individual requirements) from the Principal Partner and supplies to customers which majorly includes Government Departments, Public Funded Research Institutions, etc.
- The Principal Partner delivers the software directly to customers by providing the license keys to download the same online
- The Notification No. 45/ 2017 – CT(R) dt. 14.11.2017 (‘the Notification’) prescribes concessional rate of GST @ 5% with respect to supply of computer software to Public Funded Research Institution other than a hospital, university, etc., subject to the fulfillment of prescribed conditions
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| Issue before the Authority for Advance Ruling (‘AAR’) |
- Whether the software supplied by the Applicant qualifies to be treated as a computer software resulting in supply of goods?
- Whether the benefits of the Notification are applicable to the supplies made to the institutions specified in the Notification?
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| Discussion and Findings of the AAR |
- The software sold by the Applicant is a pre-developed/ pre-designed off-the-shelf software, which is made available through the use of encryption keys and not customized or developed for any specific customer. Hence, it satisfies all the conditions to include them under the definition of ‘goods’
- The goods supplied cannot be used without the aid of computer, has to be loaded on a computer and become usable post activation. Therefore, the same qualifies as a ‘computer software’/ ‘Application Software’ and covered under the HSN 8523
- Supply of software (not designed and developed specific to any customer) by the Applicant qualifies as ‘supply of computer software as goods’
- ‘Computer software’ is covered under the Notification and thereby supply of such software to Public Funded Research Institutions would be liable to GST@ 5%
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*Advance Ruling No. KAR ADRG 25/ 2020 dated 23 April 2020 (The Authority for Advance Ruling, Karnataka) |
