Service tax liability - offerinf some equipment

[Guest]

We want offer some equipment to our customer at a consolidated cost which also includes erection, installation and commissioning at customer's site. what is our service tax liability?

[Surender Gupta]

It dependents upon the nature of contract, if the two contracts are independent, in that case service tax is chargeable on the amount of erection, installation and commissioning. If the contract is in the nature of works contract you may pay service tax on the whole value minus cost of equipment. In this case, the terms and conditions of your contract would be the guiding factor.

AI Summary

Service tax liability: depends on contract-tax the erection/installation component if separate, or taxable on works contract value minus equipment cost. Service tax depends on contract structure: where equipment supply and erection/installation/commissioning are independent contracts, tax applies to the amount attributable to those services; where the arrangement is a works contract, tax applies to the composite contract value less the cost of equipment. The contract terms determine the applicable treatment.