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Service tax on plant and Machinery moveable in nature


Dear friend,

There is confusion on applicability of SERVICE TAX on IMMOVABLE & MOVEABLE property.

Notification No. 23/2007 S.T> dated 22/5/2007 w.e.f. June 1, 2007 takes in the net "Renting of Immovable property which includes Factory, Office Building, Warehouse, theatres, exhibition halls and multiple-use-buildings (sec-65 (90a).

Is is fair to demand service tax on Moveable Property such as Machinery, trucks, dumper, tractor etc under the grab of above notification or any other count under prevailing rules of Service tax ?  In our opinion there is no applicability under any notification, act or rules in force by which above rental receipts from moveable property are under SERVICE TAX NET.  What would be the treatment in following circumstances if for example during Financial Year 2006-07 :

Rental receipt from Moveable machinery is as under:

Rs. 8,50,000/- receipt from rent of machinery (moveable) and portable in nature

                           which is not Rental from IMMOVABLE Property (Sec 65 (90a).

Please clarify the position under Service tax act. 

Regards

Manu-Priyank

Management student.

 

   

 

 

 
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Chartered Accountant


The entry which needs to be examined is supply of tangible goods under service tax.

Where movable machinery is hired out and the control and possession is given to the cusotmer the transaction would be liable under the VAT/CST law.

Where the possession/ control is not given to the cusotmer then the same is liable under supply of tangible goods wef 16.5.2008

 

Warm Reagrds

Madhukar

 
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Dear Madhukarji,

Thanks for your valued reply. In fact your reply in two part one relates to State Law under VAT Tax or Central Act -CST applicable in cases suitably .Second part relates to Service tax. We would like you to kindly clarify further: 

UNDER VAT/CST ACT:

Where movable machinery is hired out and the control and possession is given to the cusotmer the transaction would be liable under the VAT/CST law.

What would be tax liability under VAT/CST Acts in case machine is given on rent  and possession is not given to the customer. It is operated by Owner employees but at the running cost of customer. Machine goes and works in customers premises but control and possesion remains with the machine owner. 

What would be position under right to use act or work contract under VAT/CST UNDER SERVICE TAX ACT :

The entry which needs to be examined is supply of tangible goods under service tax.

Where the possession/ control is not given to the cusotmer then the same is liable  

under supply of tangible goods wef 16.5.2008 : It came in force from 16.05.08.  Prior to it for 2006-07, 2007-08 and upto 15.05.08 was rental income from moveable machinery irrespective of any limit or condition was beyond /exempt the  net of service tax under any section/head whether possession and  control given or not  

 Under supply of tangible goods brought into net  of ST w.e.f. 16.05.08 what would be tax liabilityunder possession and control given/possession and control not given situation.

Which one step and mode would be beneficial for machine owner ?

Lastly Is is sure that there was no taxibility under service tax act for any limit for receipts of rental from moiveable property prior to 16.05.08 and rental income from immovable income has noting to do with it.

Regards,

Manu Priyank

Warm Reagrds

Madhukar

 
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Dear Madhukarji,

HAPPY NEW YEAR 2009.

Heard nothing as yet . Kindly clarify the situation in the light of notification dated 26.06.08 which exempts 1st person who supplies service such as lorriy, machines goods carriage etc. without transferring right of possesion and effective control and such itesm are subsequently used by a transport operater registered undr service tax or used directly by a customer in his mafg./mining activity what would be position for all 3 parties. i.e. 1st Lorry/Machiner owner, 2nd Middleman or service provider/GTA 3rd customer who uses the above equipment directly taking on rent/hire from 1st party or 2nd party in his mafg/mining activity and allied jobs in his premises.  

It raises vital issue of  multipoint taxation under various state and cental laws in addition to service tax.   KIndly clarify. We find loopholes in the section and coverage of Tangible goods w.e.f. 16.5.08 can be cha llanged before court of law on its vailidity and multipoint taxation. Kindly revery and favour us with your valued suggestion.

Regards

BK Bhargava

 
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service tax on renting of building and plant & machinery. machinery is fixed to earth. it is textile spinning unit.

regards,

aseem Pahwa

panipat

 
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