Clarification - Vat or Service tax

[Guest]

We have an anuual maintenance contract @.40/copy with a service provider for xerox. We are proving everything .i.e. paper,manpower,electricity etc. The service provider only provide free tonar etc. without charging a single amount for the same. Now service provider charging service tax @12.36% which according to me correct but also imposing VAT @7.45% on same billing amount which I think not correct since both these two tax can not be applied on same amount since VAt is related with transfer of property of goods and service tax against service provided like here AMC nature though billing is monthly.According to provider, VAT is correct because they are providing Tonar etc. at free of cost. My question such tonar as free of cost and not included in said .40/copy as per agreement that is why they cannot charge VAT as there is no transaction value(since it is free.i.e NIL). SO service tax must be charged and not VAT.

AI Summary

Debate on VAT vs. Service Tax for Xerox Service Contracts: Are Toner Supplies a 'Sale' or Service? A discussion on a forum involves a query about whether VAT and service tax can both be applied to an annual maintenance contract for xerox services, where the service provider supplies toner at no extra charge. The original poster believes only service tax should apply, as VAT pertains to the transfer of property, which is not occurring. One respondent agrees, stating that VAT is not applicable since no property is transferred. Another respondent argues that the replacement of parts constitutes a 'sale,' making VAT applicable as a 'works contract,' depending on the AMC agreement details.