TaxTMI 
TaxTMI 
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’?
Works Contract Service
25 May 2022 
5 Replies 
2086 Views Asked by
Sale of goods vs service: replacement parts in AMC treated as sale, not works contract, shaping indirect tax treatment.
Replacement parts charged separately during an Annual Maintenance Contract are treated as sale of goods-not part of Works Contract Service-so VAT on parts and the mutual exclusivity of service tax and VAT determine indirect tax treatment; cited appellate decisions and a Supreme Court judgment support that tax demands on parts used in AMC turn on how components are invoiced and taxed. (AI Summary)
Replacement parts charged separately during an Annual Maintenance Contract are treated as sale of goods-not part of Works Contract Service-so VAT on parts and the mutual exclusivity of service tax and VAT determine indirect tax treatment; cited appellate decisions and a Supreme Court judgment support that tax demands on parts used in AMC turn on how components are invoiced and taxed. (AI Summary)