License Fee

License Fee for use of software

Software is a product of intellect and protected by the Copyright. Generally, the software developer will grant licence for use of the software for a consideration. The software licence may be a sticker or a document or a product key or a combination of any the above. Exemption Notification No. 21/2002 dated 1 March 2002 (S/No. 157) exempts document of title conveying the right to use Information Technology software. As per the explanation, 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 an automatic data processing machine.

Apex Court in the case of Commissioner of Customs vs Pentamedia Graphics Ltd [2006 (198) ELT 164 (SC)] has examined scope of computer software in detail and held that if the twin criteria i.e. (i) recorded in a machine readable form, and (ii) capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine is fulfilled, it would be covered by term ‘information Technology Software’.

In view of above, even telecom software is information technology software if capable of being manipulated by computers.