Levy of Vat and Service Tax

[vijayapura shankaranarayana sastry lakshmi kantha]

LEVY OF VAT AND SERVICE TAX: COMPANIES LIKE ORACLE HAVE STARTED LEVYING BOTH VAT AND SERVICE TAX ON SOFTWARE LICENCES SUPPLIED BY THEM. AS PER SUPREME COURT JUDGEMENTS IN OUR OPINION VAT AND SERVICE TAX BOTH ARE NOT LEVIABLE AND VAT ON PRODUCT AND SERVICE TAX ON SERVICES AS THERE IS NO CHANGE IN LAW ON INTRODUCTION OF IT SERVICES UNDER SERVICE TAX FROM CURRENT YEAR MAY 08. GRATEFUL TO HAVE YOUR VIEWS

[Surender Gupta]

There is no change in the statutory provisions to enable levy of both the taxes (VAT and Service Tax) simultaneously. This practice is not correct.

[GANAPATHY RAJENDRAN]

NO VAT AND SERVICE TAX CAN BE LEVIED SIMULTANEOUSLY ON THE SAME VALUE. VALUE IS TO BE BROKEN INTO TWO PARTS. ONE FOR TOWARDS SALE OF SOFTWARE ON WHICH EXCISE AND VAT MAY BE LEVIED AND OTHER COMPONENT IS TOWARDS SERVICE ON WHICH SERVICE TAX IS TO LEVEIED

[Guest]

Sir, In vat returns is it required to reported labour portion ( arised in works contract)in vat returns. if required where it is to be reported. thanks c.sekhar.

[Anantha Padmanabha Bhat]

Can some one highlight the case laws if any on this issues. Also share generally accepted accounting priciples to bifurcate Sale component and Service component on Sale of software.

AI Summary

Debate Over Dual Taxation on Software Licenses: VAT and Service Tax Applied Despite Supreme Court Guidance Companies like Oracle are levying both VAT and Service Tax on software licenses, despite Supreme Court judgments suggesting this practice is incorrect. The consensus among forum participants is that VAT and Service Tax should not be applied simultaneously on the same value. Instead, the value should be divided into two parts: one for the sale of software, subject to VAT, and the other for services, subject to Service Tax. Participants also discuss reporting requirements for labor in VAT returns and request information on case laws and accounting principles for separating sale and service components.