Installation charges not recovered separately in case of sale and installation of solar systems — The Department levied service tax on notional basis — 33% of the total consideration — Held, Service tax applicable on installation portion even if not charged separately — Matter remanded back to ascertain the correct amount of the installation service based on the data sheet submitted by the assessee.

The appellant a manufacturer of solar water heater systems sold the same and the value also included the installation of such system at the site of the buyer. Central excise duty was not charged on the same in view of the exemption to solar systems. No separate consideration was charged in the invoice for installation. Simultaneously, the appellant was selling solar systems to distributors also who were charging for installation separately from the end-customers. The Revenue levied service tax on notional value of activity pertaining to installation on the basis of 33% of the invoice amount. The appellant argued that no service tax should be levied. Alternatively, the service tax if at all levied must be on actual service element pertaining to installation activity based on cost data provided by the appellant.

Held:

In view of the collection of installation charges separately by the distributors in case of sales through such distributors, it was held that service tax is applicable on the installation portion even if charges for the same have not been collected separately. The matter was remanded back to the adjudicating authority to quantify the amount of installation charges on which service tax can be levied, based on the data provided by the appellant.