Facts:
The facts belong to a software compnay in Hyderabad, Andhra Pradesh, India
We are trying to enter into an AMC with HP , which is a works contract mix of both material and labour. But the porportion is not identifiable. HP wants to charge VAT @ 14.5% on the 70% of the contract value towards material value( their contention is 30% is abatement) and 10.3% on the entire value towards service tax.
Vendor's Stand
sale is not evidenced or value is not quantified or not shown separately in the invoice, benefit of exemption under the notification No 12/2003 would not be available. There is no pragmatic manner in which a split between material and service value can be arrived,at the beginning of the contract period.Hence VAT @ 14.5% on 70% of the AMC value and Service Tax @ 10.3% on the total AMC Value.
Our Stand:
Levy of VAT @ 14.5% on the AMC value is appropriate and service tax @ 10.3% is to be charged only on the balance 30% value of the AMC.
Please advice.
I will be very much thankful to you , if you provide me your invaluable suggestion at the earliest.
Thanks and Best Regards,
M.Ravi Chandra Prakash
CAclubindia
