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Information Technology Software Services [Sec 65(105)(zzzze)]
Effective upto 30th June, 2012
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Landmark Service Tax Judgment - Information Technology Software Services
INTRODUCED: With Effect From 16th May 2008
Relevant Notifications / Circulars
Landmark Judgements
Accounting Code
Service Tax 00440452
Interest  00440450
Penalty 00441461

According to Section 65 (105) (zzzze), any service provided or to be provided to any person, by any other person in relation to information technology software, including—

(i) development of information technology software,

(ii) study, analysis, design and programming of information technology software,

(iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software, breitling bentley replica watch

providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of a new system, specifications to secure a database, advice on proprietary information technology software

providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and the right to use software components for the creation of and inclusion in other information technology software products

(vi) providing the right to use information technology software supplied electronically,corum replica is a ‘taxable service’.

According to Section 65 (53a), “Information technology software” means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment.                 


Software consists of carrier medium such as CD, Floppy and coded data. Softwares are categorized as “normal software” and “specific software”. Normalised software is mass market product generally available in packaged form off the shelf in retail outlets. Specific software is tailored to the specific requirement of the customer and is known as customized software.

Packaged software sold off the shelf, being treated as goods, is leviable to excise duty.

IT software services provided for use in business or commerce is covered under the scope of the service. Said services provided for use, other than in business or commerce, such as services provided to individuals for personal use, continue to be outside the scope of service tax levy. Service tax paid shall be available as input credit under Cenvat credit Scheme.

Software and upgrades of software are also supplied electronically, known as digital delivery. Taxation is to be neutral and should not depend on forms of delivery. Such supply of IT software electronically is covered within the scope of the IT Software Service.

Service provided in relation to advice, consultancy and assistance on matters related to IT software shall be leviable to service tax under the IT software service.


(a)  Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/-  (Service Tax Notification No. 08/2008-S.T., dated 01.03.2008)

(b)  Services provided to the United Nations or International Organisations

(c)  Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d)  Services which are exported as per ‘Export of Services’ Rules

(e)  Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f)  Services provided by Reserve Bank of India

(g)  Out of total value of service provided proportionate value of goods and material provided by the Service Provider

Service Tax Notification No. 53/2010-S.T., dated 21-12-2010 (Effective from 21-12-2010) Conditional exemption from whole of the service tax tor packaged or canned software.
Service Tax Notification No. 52/2010-S.T., dated 21-12-2010 (Effective from 21-12-2010) Withdrawal of exemption granted vide Notification No. 17/2010-S.T., for the right to use packaged or canned software from whole of service tax
Service Tax Notification No. 51/2010-S.T., dated 21-12-2010 (Effective from 21-12-2010) Withdrawal of exemption granted vide Notification No. 02/2010-S.T., for the right to use packaged or canned software for single use
Service Tax Notification No. 17/2010-S.T., dated 27-02-2010 Effective from 27-02-2010) exemption for the right to use packaged or canned software from whole of service tax subject to certain conditions including payment of customs duty on software
Service Tax Notification No. 2/2010-S.T., dated 27-02-2010 Effective from 27-02-2010) exemption for the right to use packaged or canned software from whole of service tax subject to certain conditions including payment of excise duty on software
Service Tax CBEC Instruction Letter D.O.F. No. 334/13/2009-TRU), dated 06-07-2009 Clarification regarding the changes made by the Finance Bill, 2009 including the one relating to Information Technology Service
Service Tax CBEC Instruction Letter (File No. 334/1/2008), dated 29-02-2008.
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Case Laws Related

  • STO 2014 CESTAT 35
  • Service Tax: Software development and other information technology related services to its group/associated companies W.e.f. 16/05/2008: Refund: Scope: If the CENVAT credit account is correctly maintained the credit could not be taken in the account in the month of July 2008. When credit could not have been taken, question of accumulation of credit because of inability to utilize does not arise. Just because of the refund claim filed in November 2008 and because appellant did not follow the correct procedure for availing the CENVAT credit, the appellant find themselves in a situation wherein they have claimed accumulated CENVAT credit before payment and availment of credit. That being the position, the decision of the lower authorities to disallow the credit cannot be found fault with. Provisions of Section 11B would be applicable for the refund claims that are filed under Rule 5 of CENVAT Credit Rules 2004 also.(Para 4,5).

    Services in dispute in this case are all covered if we apply the ratio laid down by the Hon'ble High Court of Karnataka in the case of CCE, Bangalore-III Vs. Stanzen Toyotetsu India (P) Ltd. STO 2011 Kar 817. (Para 3).

    Appeal disposed off.

  • STO 2013 CESTAT 1138
  • Information Technology Software Services: Demand: Stay: There is no dispute that appellant has been paying service tax on output service rendered by them in India. Under these circumstances, the claim of the appellant that in view of revenue neutral situation, extended period could not have been invoked in this case has to be accepted.

  • STO 2013 CESTAT 642
  • Information Technology Service or Manpower Supply Service: Appellants deputed skilled personnel including computer engineers to work under the supervision and control of TCS and Infosys personnel in-charge of projects undertaken by TCS and Infosys : Appellants are getting paid in terms of the man hours for the persons deputed to work under the control and supervision of TCS and Infosys: Subsequent period they have classified the services under ITS: There is no system of assessment by the department now. The assessee is expected to assess the service which is nothing but classification, valuation and work out the liability and pay the tax. In the absence of an assessment by the Revenue, we cannot say that what has been done has been accepted. In any case, it is always possible that if no differential tax is payable, the officers may not take any view about It: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 180
  • Customized Software: Service tax demanded under “Information Technology Service”: Appellants submit that product classified under Chapter 8523 8020 and treated as “manufacture” by the deemed fiction of Chapter notes: No service tax to be levied which is a result of mis-conception.

  • STO 2013 CESTAT 94
  • Information Technology Software Service: Demand: Stay: Revenue neutrality as they could have asked for refund being EHTP unit: Stay granted.

  • STO 2013 CESTAT 31
  • Information Technology Software: Whether the appellants purchased and sold the software on payment of VAT or they developed the software as per customer's specifications and supplied to their customers: Facts not clear, matter remanded back.

  • STO 2012 CESTAT 1086
  • Information Technology Service: Business Auxiliary Service: Appellants provided services classifiable under IT Service and not BAS : IT service became taxable 16/5/2008: Demand set aside.

  • STO 2012 CESTAT 662
  • Information Technology Service: Received from abroad in 2007 when this service was not taxable: Payment received after levy of service tax on the said service: Service tax not payable on services received in December, 2007.

  • STO 2012 CESTAT 397
  • Information Technology Service: mere payment of VAT on sale value would not per se preclude the Revenue from levy of service tax on the taxable service involved in the transaction.

  • STO 2011 CESTAT 264
  • Information Technology Service: Appellate preparing bills on the tailor made software and handing over the bills to clients not to the customers of the clients: Before 1.5.2006 BAS definition excluded Information Technology Service, hence, not taxable.

  • STO 2010 CESTAT 304
  • Service Tax: Scientific or Technical Consultancy Service: Information Technology Service: Pre-deposit: Applicants are developing the software and their keeping upgradation of the same which is well covered under the 'Information Technology Service' for which the applicants are paying service tax w.e.f. 16.5.2008 when the impugned service came into the net of service tax. The demand pertains to the period prior to that. Hence, demand is not sustainable. Waive the requirement of pre-deposit and stay the recovery thereof during the pendency of the appeal.  (para 2,3)

  • STO 2010 CESTAT 361
  • Service Tax: Cenvat Credit by STP Units: Input Services: Para 6.11 of the Hand Book Procedures of the Foreign Trade policy 2004-2009: Obviously the policy of the Government is to allow STP units like the appellants Cenvat credit of duty/service tax paid on input/input service. This benefit is apparently not limited by provisions of the CCR. Therefore, the appellant was entitled to take credit of service tax paid on input services. (para 5)

    Service Tax: Software development: Export of Software: Refund of Accumulated Credit: Bar of limitation under Section 11B: The ‘relevant date’ specified in Section 11B of the Act does not mention anything as regards refund of cenvat credit. Therefore, the limitation u/s 11B does not apply for refund of accumulated cenvat credit. (para 5)

    Service Tax: Software development: Export of Software: Cenvat Credit: Registered Service Provider: Documents not produced: Unless the developer of software exported is registered with the department, it cannot earn credit of service tax paid on input services in its accounts. Refund is allowed of credit earned which cannot be utilized, for any reason, and lying in the cenvat account. The objection that the claim had not produced the documents to substantiate the entitlement and the amount is to be sustained. In the result the appeal is rejected. (para 5,6)

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