Works Contract Service

[Kaustubh Karandikar]

XYZ is providing Annual Maintenance Contract Services of Air conditioner. During maintenance, if any parts need to be replaced, he is buying the same are charging to the customer for the same. Will it fall under ‘Works Contract Service’ definition under the ‘Service Tax Regime’?

AI Summary

AMC Parts Replacement in Air Conditioners Deemed Non-Taxable as Service; Considered Sale Subject to VAT A user inquired whether replacing parts during an Annual Maintenance Contract (AMC) for air conditioners falls under 'Works Contract Service' for service tax purposes. An expert clarified that it is not taxable as it constitutes a sale, not a service, and VAT is likely paid on the parts. The expert referenced case laws supporting this view, stating that service tax and VAT are mutually exclusive. Another participant confirmed that the explanation was thorough and noted that no tax is charged on parts replaced under AMC, supporting the conclusion that the demand for tax on these parts is unsustainable.