Sale cum installation of computer hardware??

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...!!