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

[Asked by Guest]

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

Ur treatment of applicability of Service Tax 10% on service charge and VAT 12.50% on the product is correct.

But the bill should be raised on actual basis and not 50:50 basis. If you supply a spare on maintenence of the Genset then VAT is applicable or if you only provide service alone, ST is applicable.

AI Summary

Service tax versus VAT: classify and invoice genset works by actual supply nature to determine applicable tax.
Applicability of indirect taxation depends on the nature of the supply: labour-oriented acts like installation, commissioning, or maintenance attract Service Tax, whereas supply of tangible spare parts or products attracts VAT. Billing should reflect the actual basis and segregate service and goods components; if a spare is supplied during maintenance VAT applies to that portion, while a pure service attracts Service Tax.