Classification of service

This query is : Resolved

Rakhee Oswal (Querist)
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15 December 2010 X Ltd has purchased one xerox machine. company entered in to an arrangement with y ltd through which y ltd appoints a person who is using its own papers(i.e.of y ltd) and provide xerox copies to company whenever required.Y Ltd is charging @ 48 paise per copy. Ink, cartridges,oiling & maintenance of the machine is done by Y Ltd only.

Now when y.Ltd is raising bill its charging VAT @ 5% on 75% of the bill amount and Service tax @ 10.36% on 100% of the bill amount. For service tax Y Ltd is considering itself in the category of Annual Maintenance services.

Queries:
1) It will come under which category?

2)Can we classify it under WCT?
a)If it can be categorised as WCT then what rate will be applicable?

b)And if not then how it will be taxed?

3)Can you give reference to any circular or notifications

Kindly reply as it is urgent..

Thanks

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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15 December 2010 Since the rate is fixed 48 paise per page and material cost and labour cost cannnot be segregated, being a composite nature , it may treated as WCT.

Tax rate will be 4% .

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