Dear Vipin,

In the instant case, no service tax is required to be paid on the installation expenses as the installation is only incidental to the sale of goods i.e machinery. In this regard, you can rely on the following judgment i.e. Sumangalam Suitings (P) Ltd. v. CCE ,(2010) 19 STR 809 (Tri- Del)wherein it was held that 'assessee’s contract was a contract for supply of goods and the arrangement of transportation was merely incidental to the supply of goods and not a provision of service'. The case in hand can be squarely applied to your case. Further, you can also rely on the judgment given in the case of Alidhara Texspin Engineers V. Commissioner of Central Excise & Customs, Vapi 2010 (20) STR 315 (Tri-Ahd).

Hope the above suffice.

Dear Vipin,

The instant case is strainght forward case of sale simplicitor and there is no question of any service tax implications (please note that the answer is given on a premise that the case in hand is a contract of purchase of machinery wherein the seller undertakes the responsibility of installing the same). Please do clarify if there is any change in the understanding or the facts of the case are different.

For example, when one purchases an AC, the seller also undertakes the responsibility of installiung the same wherein the seller does not charge anything separately for installation of AC. All those cases are treated as contract for sale i.e sale simplcitor and not a composite contract of sale and service.


Hope the above clarifies.