Supply of Goods

[P Ovhal]

Supply of goods transactions on which VAT is not chargeable, service tax shall be applicable?

[YAGAY and SUN]

Service tax is applicable on taxable services.  Goods can't be treated at par with the services.  But in some case Both are applicable.

[CA Rachit Agarwal]

VAT is chargeable on sale of goods.

However where there is composite that is supply of goods and services, then service tax will apply and follow Works Contract Composition Rules, 2006.

[DEV KUMAR KOTHARI]

Every supply of goods is not necessarily chargeable to VAT, a sale of any item may be exempted. It is not correct to say that if there is no VAT then there will be Service tax. Exemption of VAT can be in relation to particular dealer, buyer, or particualr goods.

VAT is on sale of goods chargeable to VAT and service tax is tax on taxable services rendered.

 

So check chargeability under relevant provisions.

[CA Rachit Agarwal]

Dear Mr. Kothari

Definitely VAT is chargeable subject to provision of relevant VAT Act.

However when I have used the word VAT, it is very common to understand that VAT rate may be NIl, 1%, 5%, 12.50%, 13.50%, 18% and 20% or other rates.

AI Summary

Service tax applicability: VAT exemption alone does not convert a goods sale into a taxable service; analyse legal character.
Service Tax is a tax on taxable services distinct from VAT, which taxes sale of goods; VAT exemption alone does not make a supply a taxable service. Composite supplies combining goods and services may attract service tax under works-contract or composition rules, so chargeability must be determined by analysing the transaction's legal character against relevant statutory provisions.