Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
Pursuant to IC § 6-2.5-2-1, a sales
tax, known as state gross retail tax, is imposed on retail transactions
made in Indiana unless a valid exemption is applicable. A retail transaction is defined as occurring when a person "acquires tangible personal property
... and transfers that property to another person for consideration." IC § 6-2.5-4-1(b)(1)-(2). Additionally, IC § 6-2.5-4-1(c)(2) provides that it "does not matter whether the property is transferred... alone or in conjunction with other property or services."
Taxpayer's billing method cannot be lump sum and time and materials simultaneously–in other words, Taxpayer cannot take a portion of an invoice (i.e., the material) and claim its billing method is different from the other items on the same invoice.
In Indiana if lumpsum is charged then all the invoice remains the same.
You can see following url for a complete finding by the state when this issue was brought to court: