SOFTWARE IS GOODS - MADRAS HIGH COURT

The Madras high court dismissed the writ petition of Info tech Software Dealers' Association raising the question whether a software would amount to goods and if so, when it is supplied to a customer pursuant to the End User Licence Agreement (EULA), the transaction is liable to be treated as sale or service. It is also raised the constitutional validity of the new provision in the Finance Act 2009, Section 65(105)(zzzze), arguing that it was the state government which had the power to impose duty.
Dismissing the challenge, the division bench of the high court stated that software is goods and whether the transaction would amount to sale or service would depend upon the individual transaction. The new provision cannot be held to be unconstitutional so long as Parliament has the legislative competency to enact law in respect of tax on service in exercise of powers under Entry 97 of List I.