Service tax
Querist :
Anonymous
(Querist) 10 October 2011
This query is : Resolved
Is service tax applicable on a company
who is in the business of supply and installation of medical equipments to hospitals.
The order is silent on the portion of service and installation.
We have cases both in favour and against..
Would like to have the experts opinion to highlight the issue.
Sanjay Kumar
(Expert) 10 October 2011
The business activity involved in the business of Supply and installation of medical equipments involves two parts - one part is the business of manufacturing and selling and another part is that of providing service of installation of Medical equipments.
The part one is an event of sale where central levy such as excise duty and respective states VAT laws is applicable.
The second part is of rendering service under Service category of Erection, Commissioning or Installation Services, hence liable to service on the gross amount charged for providing/ to be provided the above services to the customer w.e.f.01.07.2003.
In view of settled position of law, where the entire contract value i.e. supply and services is taken as assessable value for the purpose of payment of excise duty, no service tax is liable to be paid by the assessee. Because, activity of installation in this case is incidental to delivery of goods to the customer, therefore, it will not be attracting service tax.
But service charges collected which is independent of the supplies and is not includible in any of assessable value of the equipment supplied, will attract service tax. In this case, the supplier can not say that his main job is manufacture and commissioning is incidental to it.
The reference in this regard can be made of Hon'ble Supreme Court judgement in the case of State of Andhra Pradesh Vs. Kone ELevators (India) Ltd 2005 (181) ELT 156(SC)
Sanjay Kumar
soumitra basu
(Expert) 14 October 2011
The answer is correct and I agree
Guest
(Expert) 14 October 2011
Sales and services are two distinct parts of any business. If your company charges fee for services rendered in addition to the cost of equipments, definitely your company is liable to pay service tax also.
