Is installing software a service or sale of goods?
A case is filed in the Bombay HC involving Axis Bank and the Municipal Corporation on goods movement into the city, which attract octroi. Tips for online purchasing
By PTI |
MUMBAI: Does installation of a software programme amount to rendering a service or is it a sale of goods?
That is the question before the Bombay High Court in a case involving Axis Bank and the Municipal Corporation.
Axis Bank (former UTI Bank), earlier this year, hired the IT major Infosys for upgrading its computer system. It bought Infosys-developed software called Finnacle.
Now, since Infosys is a Bangalore-based company, Municipal Corporation of Greater Mumbai is demanding octroi on the transaction, and the bank is not willing to pay it.
MCGM sent a notice to the bank a few months back. The bank is disputing it before the High Court.
Bank's contention is that it did not buy any "goods" from Infosys; the latter sent its engineers to Mumbai to install the software. So it was a service contract, not a sale of goods. There is no demand of service tax, it contends.
Its lawyer also pointed out before division bench of Chief Justice Swatanter Kumar and J P Deodhar last week that Infosys merely sold a license to use the software, not the software itself.
But MCGM's lawyer K K Singhvi countered this argument by pointing out that even though it was a computer programme, Infosys engineers must have carried it on a floppy or a CD.
This amounts to movement of goods into the city, which must attract octroi, Singhvi argued.
That is the question before the Bombay High Court in a case involving Axis Bank and the Municipal Corporation.
Axis Bank (former UTI Bank), earlier this year, hired the IT major Infosys for upgrading its computer system. It bought Infosys-developed software called Finnacle.
Now, since Infosys is a Bangalore-based company, Municipal Corporation of Greater Mumbai is demanding octroi on the transaction, and the bank is not willing to pay it.
MCGM sent a notice to the bank a few months back. The bank is disputing it before the High Court.
Bank's contention is that it did not buy any "goods" from Infosys; the latter sent its engineers to Mumbai to install the software. So it was a service contract, not a sale of goods. There is no demand of service tax, it contends.
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Its lawyer also pointed out before division bench of Chief Justice Swatanter Kumar and J P Deodhar last week that Infosys merely sold a license to use the software, not the software itself.
But MCGM's lawyer K K Singhvi countered this argument by pointing out that even though it was a computer programme, Infosys engineers must have carried it on a floppy or a CD.
This amounts to movement of goods into the city, which must attract octroi, Singhvi argued.
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