Intellectual Property In A Software Programme – A Taxable Subject Matter Or Not?

With the liberalization policy geared in, the country has been witnessing a rapid transformation in all sectors and software has emerged as one of the vital aspect of trade and commerce. Of late, the Apex Court in India had an opportunity to determine the scope of the software as ‘goods’ to attract levy of sales tax.

The Constitution Bench of the Supreme Court of India in Tata Consultancy Service v. State of Andhra Pradesh 2006 (33) PTC 652 (SC) addressed an interesting question as to whether ‘canned softwares’ can be treated as goods to attract Sales Tax duty under the provisions of Andhra Pradesh General Sales Tax Act, 1957 (the Act) and whether Section 2 (h) of the Act which defines ‘goods’ to mean all kinds of movable property other than actionable claims..… covers only tangible property and precludes intangible property.