Sap India Private Limited vs The Assistant Commissioner of Commercial Taxes (Intelligence-13) and Another

Huluvadi G. Ramesh, J.—Petitioner is assailing the order of the Assessing Officer incharging licence fee at 12.5% for the period September 2006 to March 2007. According to the petitioner, earlier the respondent-authority for the year April 2005 to March 2006 has charged licence fee on the software at 4% as per Entry 34 of the Third Schedule. The petitioner''s grievance is, for two different periods there is differential treatment. Entry 34 came into force from 7-6-2005 as such, although it is clarified during 1-4-2007 that it is one of the species of licence to be taxed at 4% and already he has obtained an order that licence fee on software is taxable at 4%, but for the subsequent period, by virtue of the amendment of 1-4-2007, a different rate of tax i.e., at 12.5% is sought to be imposed. According to the Counsel, since already a different tax authority having felt that it only attracts tax at 4% even before 1-4-2007 or after 1-4-2007 and since this 1-4-2007 amendment is only a clarification, there is nothing as such to vary the tax from 4% to 12.5% and throughout it was uniform and, the impugned order has been passed without properly understanding Entry 34 which also covers software licences to be levied with 4% tax.

For the period April 2005 to March 2006, when the tax levied by the respondent-authority is at 4% and although levy of tax challenged in this petition is also for the period prior to 1-4-2007, why a differential treatment is met out is not clear particularly when Entry 34 of the Third Schedule to the Act speaks of licensee fee on the software. In the circumstances, impugned order is set aside. Since the petitioner has already paid 50% of the disputed tax while assailing the matter before this Court, it is for the respondent/Assessing Authority to consider the case of the petitioner as to whether licence fee on software occurring in Entry 34 of the Third Schedule to the Act attracts tax at 4% or 12.5%, after hearing the petitioner, in accordance with law. Petitioner to appear before the authority within one month from the date of receipt of a copy of this order.

Petition is allowed.