LexTATA CONSULTANCY SERVICES versus STATE OF ANDHRA PRADESH
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A TATA CONSULTANCY SERVICES v. STATE OF ANDHRA PRADESH NOVEMBER 5, 2004 B [N. SANTOSH HEGDE, S.N. V ARIA VA, B.P. SINGH, H.K. SEMA AND S.B. SINHA, JJ.] Andhra Pradesh Sales Tax Act, 1957-Section 2(h) and (n) and section C 5-Computer Software Packages-If 'goods' and assessable to Sales Tax- Held: Computer Software is intellectual corporeal property-Once intellectual property is put on to a media, in the form of books or canvas or computer discs or cassettes, and is marketed, it would become 'goods '-Sale is not of the media which has very little value-Software and the media cannot be split up-Buyer purchases and pays for the intellectual property and not the media- , D Furthermore, software programmes, canned and uncanned are capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored and possessed-Hence, transaction sale of computer software is sale of 'goods' within the meaning of the term 'goods' defined in the Act and as such assessable to Sales Tax. E Sales Tax: Term 'goods '-Scope of-Held: Term 'goods' is very wide and includes all types of movable properties, tangible or intangible-Test to determine whether a property is 'goods', for levy of Sales Tax is whether the concerned item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed-It is noi whether F the property is tangible or intangible or incorporeal-Andhra Pradesh Sales Tax Act, 1957-Section 2(h)-Constitution of India, 1950-Article 366(12). Words and Phrases: 'Goods '-Meaning of in the context of Article 366(12) of the Constitution G of India and section 2(h) Andhra Pradesh General Sales Tax Act, 1957. H The question which arose for consideration was whether the canned software - Computer Software Packages sold by the appellant-Computer Consultancy can be termed to be 'goods' and as such assessable to Sales 1040 TATA CONSULTANCY SERVICES v. STATE OF A.P. 1041 / ~ Tax under the Andhra Pradesh General Sales Tax Act, 1957. A Dismissing the appeals, the Court HELD: Per S.N. Variava, J (for himself and N. Santosh Hegde J, B.P. Singh J and, H.K. Serna J) B 1.1. The term "goods" as used in Article 366 (12) of the Constitution of India and as defined under the Andhra Pradesh General Sales Tax Act, 1957 is very wide and includes all types of movable properties, whether those properties be tangible or intangible. In India, the test to determine whether a property is 'goods', for purposes of sales tax, is not whether c the property is tangible or intangible or incorporeal. The test is whether the concerned item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed etc. (1064-B, F) 1.2. Computer Software is intellectual corporeal property. D Intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become 'goods'. A.software programme may consist of various commands which enable the computer to f>erform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it E becomes goods, which are susceptible to sales tax. There is no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very F little value. The software and the media cannot be split up. The buyer purchases and pays for intellectual property and not the me.dia-the disc or the CD. Furthermore, software programmes, both canned and uncanned are capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. Thus, a transaction of sale of computer software is clearly a sale of 'goods' within G the meaning of the term as defined in the Act. (1064-C, D, E; 1065-C) Commissioner of Sales Tax, Madhya Pradesh, Indore v. Madhya Pradesh Electricity Board, Jabalpur (196911 SCC 200; Associated Cement Companies Ltd. v. Commissioner of Customs, (20011 4 SCC 593 and State of A.P. v. H -( National Thermal Power Corpn. ltd. and Ors., (2002) 5 SCC 203, relied on. 1042
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