Neem Infotech, while retaining the copyright with it, is selling information technology software as: (i) Shrink wrap software (ii) Multiple user/paper license; and (iii) Internet download. In terms of end user license ag

The facts of the case of Neem Infotech are similar to the case of Infotech Software Dealers Association v. Union of India where it was held that although the software is goods, whether the transaction amounts to sale or service would depend upon the individual transaction and for the reason of that challenge, the amended provision cannot be held to be unconstitutional so long as the Parliament has the legislative competency to enact law in respect of tax on service in exercise of powers under Entry 97 of List I of Schedule VII. Sale requires the transfer of goods as well as the right to use them. In the case of Neem Infotech, since the developer has retained the copyright of software, the dominant intention was to transfer to the subscribers or members, only the right to use the software. Thus, a license to use software which does not involve the transfer of 'right to use' would neither be a transfer of title to goods nor be a deemed sale of goods. Here, the activity would fall in the definition of 'service' under the declared service category specified in clause (f) of section 66E.