service tax and vat

[Dharmender Kumar]

Sir,

I have received a tax invoice from a party. the invoice related to supply and installation of Quick Heal Antivirus. The bill date is 21 April 2016 and in this invoice the party has claimed service tax 14.5% and VAT 5% on same bill value. So you are requested to please suggest me The same charges are applicable on Invoice or not. The other details are given below:-

40 No. Antivirus @1800/- per Antivirus = ₹ 72,000/-

Service Tax14.5%= Rs.10,440/-

Vat Output 5% (Sale)= ₹ 3,600/-

Departmental Charges (0.25%)=Rs. 180/-

So please help me and suggest me the above mentioned tax calculation are correct or not as per point of taxation and Law also.

AI Summary

Taxation of software services: VAT and service tax can both apply, but allocation or deduction for supply portion is required.
VAT applies to the supply portion (sale or transfer of right to use) while service tax applies to the service component (installation or intellectual property service); for composite contracts the supplier may opt for a composition scheme or apply a state-prescribed standard deduction to separate supply and service values. Valuation rules lack uniform percentage allocations, leading suppliers sometimes to charge both taxes on full value, though state VAT deductions and credit mechanisms like cenvat may affect correctness and working capital impact.