By Ramdas S, CRN Network, November 03, 2009, 1400 hrs
Software reseller community is waiting with bated breath as the Chennai High Court is expected to finally hear the petition filed by ISODA challenging the levy of service tax on packaged/canned software. They were previously declared as goods with VAT charges.
The original petition was filed in March this year and was supposed to be heard on October 30 by the special division. According to channel partners, general elections might have played a part in the delay.
"Post the amendment to the Finance Bill, software license was classified as a service and hence levied Service Tax (ST) on the license value of packaged software,” said Harinder Salwan, Secretary, ISODA. “The double taxation has cost the industry a lot. Many software resellers are likely to report net loss for the period, since service tax means TDS cuts. For a reseller to make effective margins and be profitable, the street prices on software have to be marked higher by 26 percent."
"We are challenging the notification, the finance bill and its subsequent amendment on several counts. Our case appears to be strong. We have received several alternative legal opinions from advisors of various channel partners, distributors and even vendors," said Salwan. "We are hopeful of receiving a stay from the honorable court.”
"For a small reseller, selling software has become a loss making exercise. The government is quite apathetic to the reality," rued PN Prasad, President of Confed-ITA.
"We need a quick resolution to the problem. No one wants run a loss-making business. We fear that many resellers will abandon selling software, and that will be a collective loss to the industry, the economy and exchequer," said Suresh Pansari, MD, Rashi Peripherals.
Looks like all eyes and ears are trained on the hearing now. |