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TMI BlogRegarding Service Tax on Installation chargesX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Expert's Please give your valuable comment''s on below issue. One of my clients engaged in Manufacturer of Modular Furnitures.It is a partnership company, company had registered under Central Excise and Service Tax also.Company comes under SSI unit. 1.Company made Excise Invoice but Excise not charged because ( previous year Turnover not crossed 4 Crore). For Example in Invoice breakup can be given below. Material Cost Rs 100 Freight cost Rs 10 Installation Charges ₹ 10 Excise Duty Exempted as per section SSI/08/2003/CE VAT @ 14.5% (on ₹ 120) 17.40 Total Material Cost 137.40 We filed ER3 return Quarterly and we shown Installation charges is also Excise Turnover in ER3 Return. Now m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y question is on Installation charges we have charged Service Tax or we make separate Bill for Material and Separate Bill for Installation. Please guide me. - Reply By KASTURI SETHI - The Reply = Dear Sir, As you are registered with ST separately, it is better to issue separate bill for service tax charges. Thus it will be convenient for you (accounting purpose) and for the department also. You may mention Central Excise invoice no. on Service Tax invoice for correlation purpose. - Reply By Ganeshan Kalyani - The Reply = Whether you collect installation charges separately? - Reply By MUKUND THAKKAR - The Reply = GR Satishkumar, it is adviseable to take two seprate purchase order from customer, one purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order for supply and one purchase order for installation. and genrate two seprate bills for supply issue excise invoce and for installation servicetax invoice. - Reply By KASTURI SETHI - The Reply = Yes Sir. This method will be more convenient. - Reply By GR Satishkumar - The Reply = Dear Sir, we treated Installation and Freight charges also cost of Material Value, and we treated Installation and Freight also Excise Turnover. But our record purpose in invoice we have shown Freight and Installation charges separately. In this case we charged service tax on Freight and Installation is compulsory. Please guide me. - Reply By KASTURI SETHI - The Reply = Segregation on the buyer's invoice is also required. What is the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arriving at the value of installation charges ? For future, it is better to adopt the method advised Sh.Mukund Thakkar, an expert. It is fool proof and will not attract any dispute. However, I am posting one case law in your favour/assessee's favour. 2012 (277) E.L.T. 184 (Tri. - Del.) = 2008 (10) TMI 150 - CESTAT NEW DELHI ALLENGERS MEDICAL SYSTEMS LTD. Versus COMMR. OF C. EX., CHANDIGARH - Reply By Ganeshan Kalyani - The Reply = In my view as you are not charging separately for installation and the you are also paying excise duty on entire amount , no need to show the value of installation separately. If it would have been charged separately then showing it on the face of the invoice is necessary and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y payment of service tax on installation amount is also required. - Reply By KASTURI SETHI - The Reply = Dear Sh.Ganeshan Kalyani Ji, I intend to discuss the issue with you on this platform with an intent to make concept clearer and hence enrichment of my knowledge and also for all visitors of this forum. Nobody can deny that Central Excise duty cannot be paid in lieu of Service Tax and Service Tax cannot be paid in lieu of Central Excise duty. There is difference between the rates and valuation methods. This is the legal position of any tax whether belonging to Central Govt. or State Govt. Here in this case break-up is required by law in terms of Central Excise law as well as Service Tax law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For example :- Now suppose you go to market and purchase an air conditioner and the dealer never gives bill inclusive of installation charges and transportation charges. Both the elements of cost are charged separately by the dealer. The dealer arranges for both jobs. Cost of installation may be not more than ₹ 500/-. Naturally Service Tax will be on ₹ 500/- only. In case this amount is included in the sale price, it will be inconvenient for the assessee to prove the exact due quantum of ST. In such a situation, the assessee will have to resort to or depend on CA's Certificate which is accepted by the department with supporting docs. Thus there are two ways 1. Opt for break up 2. Cost Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Certificate First option is easy. Second option is complicated and will lead to unnecessary litigation Both are in letter and spirit of law. Option is assessee's whether to choose simple or complex. In view of the above, I still prefer to the method advised by Sh.Mukund Thakkar, Sir. I am advocating practical approach which is on merits and also in the eyes of law. Looking forward to your response. Tell me where I am in the wrong so that I amend myself and picture should be clear to the querist also. Thanks regards. K.L.SETHI - Reply By GR Satishkumar - The Reply = Dear Experts, Thanks for valuable suggetions. - Reply By Ganeshan Kalyani - The Reply = Sir, i had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LED and the dealer sent engineer (of TV company) to my home to install it. The engineer did not charged extra for his visit and also on the face of the invoice there was no bifurcation between the value of LED and its installation charges. Based on this experience and related search on the forum, i replied to this query. In my view, there are many such purchases where the dealer does not bifurcate or indicate the cost of installation charges separately on the face of the invoice. Logically it is understood that the cost of LED would include the cost of installation as well. However, i was on the thought process that if the dealer doesnot charge or shows the installation charge separately on the face of the invoice, the entire considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for such sale should be subject to excise duty. But if both the cost is separated on the face of invoice or such terms was agreed with the customer by the supplier then service tax would be charged on installation portion. Therefore the dealer should check that as to how he is charging or negotiating with their customer regarding the installation, whether including the installation charges or separately charging the same. - Reply By KASTURI SETHI - The Reply = Sh.Kalyani Ji, I remained in-charge of this unit (M/s.Allengers) for two years as Range Officer. Coincidentally I was Superintendent (Adjudication) when this case again came up before me. Undoubtedly, they have won the case but after going through rigou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of litigation. They wasted time, money and energy which was avoidable. Break-up was easy process without spending any extra amount. Break up was not impossible and impracticable. - Regarding Service Tax on Installation charges - Query Started By: - GR Satishkumar Dated:- 21-12-2016 Service Tax - Got 11 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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