Applicability of service tax in the case of AMC, Installation and commissioning of Genset product

[dhanesh tk]

I need a solution for the appliability of service tax. My client is ,a authorized dealer of Mahindra & Mahindra Ltd (M&M),doing installation, commissioning and maintances of Genset product manufactured by the M&M.Total amount paid by M&M is Rs.1650/-, and my client billed Rs.825/- as labour charges (add service tax @ 10.3%) and Rs.825/- as sales (including VAT @ 12.5%).That is total amount split for service and sale in the ratio of 50:50. My doubt, is this tratment is correct or not? Dhanesh.tk

AI Summary

Authorized Dealer Billing Dispute: Correct Tax Application Requires Actual Service and Sales Reflection, Not 50:50 Split A client, an authorized dealer of a major company, is involved in the installation, commissioning, and maintenance of Genset products. They billed the company Rs. 825 as labor charges with a 10.3% service tax and Rs. 825 as sales with a 12.5% VAT, splitting the total amount equally between service and sales. A respondent clarified that while applying service tax and VAT is correct, the billing should reflect actual service and sales rather than a fixed 50:50 split. If only service is provided, service tax applies; if spare parts are supplied, VAT is applicable.