VAT and Service Tax cannot be levied on Same Transaction: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that value added tax (VAT) and service tax cannot be levied on same transaction.

The appellant is registered with the Service Tax Department for the categories of "Works Contract Services" and "Transport of goods by road/goods transport agency services'. Intelligence gathered by the Directorate General of Central Excise Intelligence, (DGCEI) indicated that the appellant had failed to pay service tax on the services rendered by them under the categories of "Mining service", "Supply of tangible goods service" and “Site formation service”.

‘Sale’ involves a transfer in the title of goods whereas a ‘service’ involves human effort / exertions, skill or labour. Service tax is a value added tax on activity. The appellant is only involved in processing of goods by quarrying/ earth work excavating of sand and wet sand and loading in the lorries/ tippers of the consumer and his services ends on the completion of the said activities. Payments of service tax as also the VAT are mutually exclusive.

In the instant case as per the statement of M Palaniswamy (appellant) dated 22/01/2015 he has not paid VAT/ sales Tax on the service charges amount received from CPWD since no sales of goods were involved. The statement has not been retracted.

A Two-Member Bench of the Tribunal comprising P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “Thus, the taxable event is each exercise / activity undertaken by the service provider and each time service tax gets attracted. Hence it is possible to distinguish service tax from VAT. This satisfies the law that one transaction can be either a service or a sale hence both VAT and Service Tax cannot be levied on the same transaction, in the impugned case also.”

“The statement has not been retracted. This fact of non-payment of VAT / Sales Tax has also been confirmed by PWD as stated at para 7 of the SCN dated 09/10/2015 itself. Since the appellant is only rendering service in relation to the mining of sand and no sale of sand is done by him requiring payment of sales tax / VAT, the appellant’s plea fails” the Tribunal concluded.

To Read the full text of the Order CLICK HERE

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