TMI Blog2022 (2) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the customers. 2.1 As per the agreement, the prices per unit for the provision of the lift is quoted under two heads (i) the price for design, supply, installation and commissioning of the lift, which is inclusive of the Value Added Tax (VAT) (ii) the prices for installation and commissioning of the lift which is inclusive of the service tax. 3. The invoice for the value of the first component as above was raised with the description Supply of Passenger lift material on which the appellant discharged VAT. Invoice value for the second component was raised with the description Erection, Commissioning and Installation charges on which appellant paid service tax. 4. It appeared to the department that the contract entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Commissioner (Appeals). Aggrieved by such orders, the appellant is now before the Tribunal. 6. Ld. Counsel Shri V. Ravindran appeared and argued for the appellant. He submitted that the period involved is from October 2010 to March 2015 and April 2015 to June 2017. The appellant had supplied, installed, tested and commissioned the lifts / elevators at customers premises. The appellants had discharged the VAT as per Rule 8 (5) (d) of the Tamil Nadu VAT Rules, 2007 thereby paid VAT on 85% of the contract value. The appellant had discharged service tax on the balance 15% under the category of Erection, Commissioning and Installation Services . The department now proposes to demand on the contract value which has already been subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the contract. Thus, the entire contract has been subjected to VAT/Service Tax. It is the contention of the department that appellants ought to discharge service tax on 33% of the gross amount charged being the liability under the service tax law. Rule 2A(ii) of the Service Tax (Determination of Value) Rules, 2006 as reproduced above, shows that the value adopted for the purpose of payment of VAT shall be taken as the value of transfer of proper in goods involved in the section of works contract for determining eth value of works contract service. Since the appellant has paid service tax on 15% of the contract value and has discharged VAT on the remaining portion, we are of the view that any differential service tax demand beyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows : 7.3 The appellant has arrived at the value of service portion of Works Contract Service as per Rule 2A (i) whereas the Department has proceeded to arrive at the value as per Rule 2A (ii) for the period after 01.07.2012 and under the Composition Scheme for the period prior to 01.07.2012. Rule 2A (ii) would apply only if the value is not determined under clause (i). The appellant in the present case has arrived at the value and also paid VAT as per the VAT Law. The value of transfer of property in goods has to be arrived at on the basis of purchase price of various goods, apportionment of overheads and profit margin. The appellant, being an assessee under the VAT Law, has to abide by the state law for payment of VAT. Thus, he can o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case and submissions of the parties narrated above it can be seen 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 as stated in para 2 above. The department is of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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