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Mon. Aug 8th, 2022
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NEW DELHI: Giving a healing touch to the company reeling from huge service tax demand from authorities on sale of ‘Quick Heal’ antivirus software, the Supreme Court on Friday ruled that the software is not interactive and hence service tax cannot be levied on its use.
In the ruling, a bench of Justices AS Oka and JB Pardiwala created a first for the SC by resorting to Hindustani counting system and used ‘arab’ instead of hundred crores. Writing the judgment, Justice Pardiwala referred to Rs 5,30,94,66,783 as “Rs five arab thirty crore ninety-four lakh sixty-six thousand seven hundred and eighty-three”.
The Quick Heal Technologies, engaged in the development of ‘Quick Heal’ brand antivirus software, which is supplied along with the licence code/product code either online or on replicated CDs/DVDs to end-customers in India, was asked by central tax authorities to pay a service tax of Rs 62.73 crore. The Customs, Excise and Service Tax Appellate Tribunal quashed the levy.
Rejecting the appeal of Commissioner of Service Tax, New Delhi, the bench said, “Once a lump sum has been charged for the sale of CD and sale tax has been paid thereon, the revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that the updates are being provided.”
“The artificial segregation of the transaction, as in the case on hand, into two parts is not tenable in law. It is, in substance, one transaction of sale of software and once it is accepted that the software put in the CD is ‘goods’, there cannot be any separate service element in the transaction,” it said.

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