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2022 (2) TMI 360 - AT - Service TaxLevy of VAT / sales tax - works contract Service - liability of service tax on the amounts on which the appellant has paid VAT - Department entertained a view that value adopted by the appellant for payment of VAT was not the actual value of the goods supplied while providing lift / escalators and that it was only a notional value - HELD THAT:- The composite activity of design, supply, erection, testing, commissioning of lift / elevators fall under the category of WCS both under VAT law and Finance Act, 1994. The appellant has to design, and supply the materials involved in providing the lift / elevator. Since the activity is composite in nature involving both supply of materials and rendering of service, including labour of construction of pit etc., the Tamil Nadu VAT Act provides for arriving at a notional value for payment of VAT. The appellants have paid VAT on 85% of the contract value as per the category of invoices issued for supply of material. The department is of the view that this is only notional and not the actual value of materials supplied. The SCN proposes to levy service tax on 40% of the entire contract value. This means levying service tax on the amounts on which the appellant has paid VAT. The appellants have also filed VAT returns periodically complying with the mandate in the State Act. It is settled position that VAT and service tax are mutually exclusive and cannot be simultaneously levied. The demand of service tax cannot sustain - Appeal allowed - decided in favor of appellant.
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