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

Concurrent taxation prohibition: VAT and service tax cannot be levied concurrently on the same software supply. Concurrent levy of VAT and service tax on the same software licence supply is not permissible; the taxable value should be bifurcated into a sale component (subject to VAT/excise) and a service component (subject to service tax), and authorities and accounting principles are sought to guide that allocation.