Levy Of VAT on Service Tax

Maharashtra Value Added Tax Act – Work Contract – Levy of VAT on service tax – Sale Price – Turnover –
HELD – On plain reading of section 2(25) and 2(33), service tax cannot be read into sale price since the definition of ‘sale price’ and ‘turnover of sales’ is not as wide as in Andhra Pradesh General Sales Tax Act. Therefore, the decision in Central Wines cannot be stretched to include service tax into the sale price – The service tax is leviable on service value. It has no relation with the goods. It is independently leviable on value of service under the Finance Act. So on plain reading of the inclusive part of the definition of ‘sale price’ u/s.2(25), the service tax could not form the part of sale price – The service tax and VAT are mutually exclusive. Therefore, it would not be liable to VAT under MVAT Act – Determination order of the Commissioner is not sustainable in law and liable to be set aside – Value of goods supplied in execution of work contract is determined in accordance with the rule 58 of the MVAT Rules. The VAT is levied on the value of goods supplied in execution of works contract. In addition, the assessing authority added service tax into the sale price so determined. The said is not permissible as the service tax and VAT are mutually exclusive and service tax would not be a part of sale price – Appeal partly allowed.