No VAT on Service Tax
RECENTLY a question was raised before the Commissioner, Department of Trade and Taxes, National Capital Territory of Delhi, “whether VAT is applicable on basic price of softwares/software licence plus Service Tax or only on basic price of software”
As per Section 2(zd) of the Delhi value Added Tax Act, 2004,
(zd) “sale price” means the amount paid or payable as valuable consideration for any sale, including-
+ the amount of tax, if any, for which the dealer is liable under section 3 of this Act;
+ in relation to the delivery of goods on hire purchase or any system of payment by installments, the amount of valuable consideration payable to a person for such delivery including hire charges, interest and other charges incidental to such transaction;
+ in relation to transfer of the right to use any goods for any purpose (whether or not for a specified period) the valuable consideration or hiring charges received or receivable for such transfer;
+ any sum charged for anything done by the dealer in respect of goods at the time of , or before, the delivery thereof;
+ amount of duties levied or leviable on the goods under the Central Excise Act, 1944 (1 of 1944) or the Customs Act, 1962 (52 of 1962), or the Punjab Excise Act, 1914 (1 of 1914) as extended to the National Capital Territory of Delhi whether such duties are payable by the seller or any other person; and
+ amount received or receivable by the seller by way of deposit (whether refundable or not) which has been received or is receivable whether by way of separate agreement or not, in connection with, or incidental to or ancillary to the sale of goods;
+ in relation to works contract means the amount of valuable consideration paid or payable to a dealer for the execution of the works contract;
The Departmental representative stated that as per the definition of “sale price”, VAT is not to be charged on Service Tax.
The Commissioner held that VAT is to be charged on the basic amount and not on the Service Tax amount.
This is an important issue which the GST Regime has to take into consideration.