Service cannot form a part of 'sale price' u/s 2(25) of the Maharashtra Value Added Tax Act, 2002

 

This Tax Alert summarizes the decision of the Maharashtra Sales Tax Tribunal in the case of M/s Sujata Printers vs State of Maharashtra and M/s. B.L. Kashyap and Sons Ltd v. State of Maharashtra. 

 

The issue before the Tribunal was regarding whether Service tax would form a part of sale price u/s 2(25) of the Maharashtra Value Added Tax Act, 2002 (MVAT Act).

 

Both the assessees had undertaken certain works contract making them liable to VAT on the goods involved in the execution of works contract and to Service tax on the service value.

 

The Revenue included Service tax paid in the sale price thereby making it liable to levy of VAT under the MVAT Act.

 
The Tribunal has observed that Service tax is leviable on service value and has not relation with goods. Payments of VAT and Service tax are mutually exclusive and thus Service tax cannot form part of sale price consequently bring it to tax under the MVAT