Repairs and Maintenance activity - Calculation of both VAT and Service Tax is applicable

[Balagurunathan Krishnamurthy]

If both VAT and Service Tax is applicable on a certain item , say , Repairs and Mainteance activity ( which attract obviously service tax as well as VAT ( erstwhile works contract tax ) , there are views of experts to the effect that , since tax on tax is not allowed , both service tax and VAT would be calculated only on the base value and nothing else , especially for calculation of service tax , VAT would not be considered. would request the reactions from the others on the same , including any CBEC circular back up for the same.

[Ravi Chopra]

There is no clarification which is available addressing the issue raised in this query. Myself is of the opinion that service tax should be applied first on the value of services before applying VAT.

AI Summary

Tax-on-tax dispute: whether VAT and service tax share a single base or service tax must be applied first. Repairs and maintenance services present a dispute whether VAT and Service Tax should both be calculated on the same base value to avoid tax-on-tax, or applied sequentially; forum contributors note no authoritative clarification and one opinion recommends applying Service Tax first on the value of services before levying VAT.