Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee
Law Related Issues
6. Sale of Canned software not included as services
Section 2 (52) of CGST Act, 2017 defines goods as ‘every kind of movable property other
than money and securities but includes actionable claim, growing crops, grass and things
attached to or forming part of the land which are agreed to be severed before supply or under
a contract of supply’.
Further section 2(102) defines services as “anything other than goods”
Issue
Draft Model GST Law specifically contained an explanation in the definition of goods which
clarified that goods do not include intangible property. The definition of services also
contained a similar Explanation to the effect that service includes intangible property. Hence,
it was made very clear that software in any form is always classifiable as a service and not
goods.
However, the explanations cited aforesaid have been deleted in the CGST Act. It has only
been specified in Para 5(d) of Schedule II that development, design, programming,
customization, adaptation, upgradation, enhancement, implementation of information
technology software is a service. The deeming provision in Schedule II is a replica of what
we have in Clause 66E of the Finance Act, 1994 which deals with Declared Services.
The deletion of the aforesaid Explanations would once again raise the long-standing
classification dispute as to whether sale of shrink wrapped software or canned software is a
supply of good or service.
Suggestion
It is suggested that an explanation as provided in Model GST law to the definitions of Goods
as well as Services be restored.
Read Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee
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