Regarding Service tax & VAT

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This query is : Resolved

Rajnish (Querist)

08 December 2010 Dea Sir,

please take a note that, we have puchased license from Vendor but vendor charged services tax as well as VAT (Including service tax).

for e.g.
Product price - 100
Add:-
Service tax @ 10.3% - 10.30
Total - 110.30
Add:-
VAT @ 5% - 5.51
Grand Total - 115.81

my point is vendor charged VAT including service tax? this is correct way?.

It is possible to vendor charged tax on tax i.e. double taxation.

Please guide me.

Regards
Rajnish

Suresh Ramaswamy

Suresh Ramaswamy (Expert)

15 December 2010 It is has been held in a number of decided cases by High Courts as well as the Supreme Court that a single transaction cannot be subject to both VAT and Service Tax. A particular transaction is either subject to VAT if it is sale of goods or it is subject to service tax if it is sale of service. A single transaction cannot be both the sale of goods and sale of services and hence the charges levied by the seller is prima facie wrong and he can only either VAT or service Tax. What has to be determined here is whether the sale of license by the Vendor is sale of goods under VAT laws of Sale of Services under service Tax Act. Prima facie it appears that it is a sale of goods subject to VAT and not Service tax.

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