Regarding Service Tax on Installation charges

[GR Satishkumar]

Dear Expert's

Please give your valuable comment''s on below issue.

One of my clients engaged in Manufacturer of Modular Furnitures.It is a partnership company, company had registered under Central Excise and Service Tax also.Company comes under SSI unit.

1.Company made Excise Invoice but Excise not charged because ( previous year Turnover not crossed 4 Crore).

For Example in Invoice breakup can be given below.

Material Cost Rs 100

Freight cost Rs 10

Installation Charges ₹ 10

Excise Duty Exempted as per section SSI/08/2003/CE

VAT @ 14.5% (on ₹ 120) 17.40

Total Material Cost 137.40

We filed ER3 return Quarterly and we shown Installation charges is also Excise Turnover in ER3 Return.

Now my question is on Installation charges we have charged Service Tax or we make separate Bill for Material and Separate Bill for Installation.

Please guide me.

AI Summary

Service tax on installation charges: separate billing or clear valuation determines whether service tax or excise applies.
Whether installation and freight charges attract service tax or form part of excise turnover depends on invoicing and valuation. The preferred practice is to obtain separate purchase orders and issue distinct excise invoices for supply and service tax invoices for installation, with cross-references between invoices. If installation is included in the sale price, a Cost Accountant's certificate or detailed records may be needed to allocate value for service tax; segregation on the face of the invoice is administratively simpler and reduces litigation risk.