2025-VIL-1507-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Information Technology Software Service, Right to use software - Appellant entered into distribution agreements with foreign vendors for distribution of Anti-Virus software in India. The appellant paid VAT on the sale of the software and also discharged service tax out of abundant caution - Department held that the appellant was eligible to use the vendor's trademarks and had the right to distribute and sell the software, and hence the transaction fell under the category of ITSS - Whether the transaction between the appellant and the foreign vendors was a sale of goods or provision of service liable to service tax - HELD - The foreign vendors had not transferred the right to use the software to the appellant, but only granted a non-exclusive intellectual property right to distribute the products. The EULA was between the foreign vendors and the end-users, and the appellant merely provided the unique activation keys to the end-users. Based on the agreement and the ratio of the judgments in Sakri IT Solutions Pvt Ltd and Quick Heal Technologies Ltd, the transaction amounted to deemed sale of goods and was not liable to service tax – Further, there the case is revenue neutral as the appellant had paid more service tax than what would have been payable under the Reverse Charge. In the absence of any deliberate suppression or malafide intent, the extended period of limitation cannot be invoked, and no penalty can be imposed - The demand of service tax, interest and penalty is set aside and the appeal is allowed
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