please clarify whether service tax and VAT both are applicable for the contract price in case of comprehensive AMC in maharashtra? or any exemptions exists. pl reply with relevant order/atleast order no.
Suhail A.Siddiqui (CEO) 04 June 2012
Vat and service tax are two acts and constitutionally valid to charge like excise duty and Vat
Shivshankar Singh (Head - Technology) 19 September 2012
It might be too late to respond to your query but it might be helpful to you as well others. Typically comprehensive AMC covers supplying labour, also supply the materials which might have to be used in the maintenance contract.
In other words, for the maintenance of the equipment’s at certain times the spare parts etc. have to be replaced and the contract covers these spares also.
In any Annual Maintenance Contract the spare parts etc. which have been used in the course of the maintenance service are definitely to be considered as sold and appropriate "sales tax"/ VAT has to be paid on the value of the material.
Once, the sales tax has been paid on the value of materials, then on the same service tax also cannot be charged. In fact you can refer to the decision of the Hon'ble Karnataka High Court which has been upheld by the Hon'ble Supreme Court . In the Modi Xerox Ltd.'s case (supra) it has been clearly held that in the Annual Maintenance Contract, the replacement of spares etc. would be considered as sale.
Hon'ble court decision hold that in any Annual Maintenance Contract the spare parts etc. which have been used in the course of the maintenance service are definitely to be considered as sold and sales tax/VAT will be applicable on on the value of such goods, simultaneously one cannot charge the service tax on the same value.
Therefore Service Tax would not be applicable for the value of material supplied during the course of maintenance contract, however, Sales Tax or VAT must be paid on the value of material supplied.