Setback for Infosys: CESTAT Rules Updates and Upgrades Not Goods, Service Tax Payable on Full ATS Invoice Value

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled against Infosys, stating that updates and upgrades provided under an Annual Technical Support (ATS) invoice are not 'goods' but 'services,' and therefore, service tax is payable on the full invoice value. Infosys had argued that a portion of the ATS invoice pertained to the supply of software updates, which should be treated as goods. However, the tribunal held that the entire ATS contract is essentially for the provision of technical support services, with updates being an integral part of that service. This decision has implications for IT companies providing similar support services, as it clarifies the taxability of such contracts under the service tax regime.