Sale cum installation of computer hardware??

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Neeta Kishorbhai Jethmalani

Article assistant

53 Points Joined January 2012

Hari Om Friends,

A Pvt Ltd company having business of computer hardwares and software is charging VAT @ 4% on sale of computer hardware and is also charging Service tax @ 10.3% For the A.Y. 2011-12 on installation services. Both the VAT and Service tax are charged on the gross value of the Goods , For example , if they are selling 2 printers worth Rs 15000/- each, then they charge Vat @ 4 + additional vat @ 1% on (15,000*2=30,000) and service tax @ 10.3% on Rs 30,000/-.

Now , my query is how can they charge service tax on value of goods sold, I mean what is the criteria of classifying the value of goods sold and services provided??

Thanks in advance...!!

Replies (4)

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

I don't think that ST needs to be charged on goods also. It shoud only be charged on the portion relating to installation services & VAt to be charged only on the protion relating to goods.

However if the Invoice is composite with no segregation of goods & installation services, then I think that ST needs to be charged on the whole amount.

Ajit kumar Dubey

Taxation Manager

637 Points Joined September 2008

The definition of services is introduced under section 66B of the Finance Act, wherein sale of any good is specifically excluded.For the definition of good you need to refer the VAT Act applicable in the state where the dealer is registered. In the instant case, the practice followed by the dealer is not acceptable and is not tenable.

CA Anushree jain

1531 Points Joined March 2012

agree with mr. dubey

Ajit kumar Dubey

Taxation Manager

637 Points Joined September 2008

Even if the contract is composite, the service receiver can specifically ask for the detailed breakup of the value of material charged and the amount charged for installation. Any ways it does not appear that the dealer earns more than Rs10 lac in an year.