Service tax on AMC a composite contract - where WCT (VAT) is paid on certain portion

[Shiv Thakur]

we are providing Comprehensive AMC service to Diffrent oil company. Under the CAMC we use spare parts without cost in diffrent state in india. So we pay Work Contract Tax to diffrent state becasue state goverment say to 'Deposit all WCT amount on your selling price of the item' but when we rasie Invoice for CAMC we charge service Tax 10.30% on total invoic value. now we want to charge servcie tax on only 40% of invoice value. and further we want to charge WCT amount which we pay to Diffrent State Goverment on Invoice. finally we want to charge WCT amount to our customer as WCT is a statutory dues.

[Surender Gupta]

I don't think that your proposal is correct. There is such provision in the service tax that in case case of AMC you would take 40% of the bill towards taxable service without any specific ground. For this purpose, you have only one option to avail the benefit of notification no. 12/2003. Therefore you need analyse your case with reference to notification no. 12/2003 and avail the exemption accordingly.

[Guest]

If you are paying WCT on 60% value of the invoice then service should be charged only on 40% value of invoice you can refer the deceiin Tribunal in case of of WIPRO GE MEDICAL SYSTEMS (P.) LTD. Versus COMMISSIONER OF SERVICE TAX, BANGALORE

AI Summary

Service tax on AMC may apply only to the taxable portion when work contract tax is paid on the balance value. Service tax on comprehensive AMC where WCT is paid on part of the invoice may be confined to the taxable portion not subjected to WCT; parties should examine the applicable service tax exemption notification and tribunal precedent supporting allocation between the WCT-covered value and the service-taxable value before attempting to pass WCT as a recoverable statutory charge to customers.