Interesting debate that could have *some* implications for FLOSS. FN
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NEWS: IT software is taxable, rules SC
Deccan Herald, Bangalore. Nov 6, 2004
NEW DELHI: DHNS The Supreme Court (SC) on Friday ruled that computer software
is liable to Sales Tax, a decision that may boost the dwindling revenue of
states. This ruling would be applicable only to "off-the-shelf" software and
not to "customised" ones.
Ninety per cent of the software sales account for the customized category.
A five-judge bench comprising Justice N Santosh Hegde, Justice S N Variava,
Justice B P Singh, Justice H K Sema and Justice S B Sinha, gave this judgement
on a petition by the Tata Consultancy Services (TCS).
The TCS had challenged the Andhra Pradesh High Court order allowing the state
government to levy sales tax on the computer software, as it classified it as
"goods" under the provisions of the Sales Tax Act.
Upholding the High Court order, the apex court said that when a person goes to
buy a CD, he or she is not paying for the mere CD but also for the software
contained in it.
While the TCS argued that software was nothing but knowledge and hence could
not be categorised as goods, Andhra Pradesh said that the off-the-shelf
software cannot be treated as "knowledge" making it liable for sales tax.
ST WILL SPUR PIRACY
Meanwhile, the National Association of Software and Service Companies (Nasscom)
has said the Supreme Court judgement making computer software liable to sales
tax, will encourage pirated software and affect the speed of PC penetration in
the country, reports UNI from New Delhi.
"Immediately, however it may impact the price paid by the user and this could
affect the speed of penetration of PCs in the country and also give an impetus
to pirated software," Nasscom president Kiran Karnik said in a statement here.