applicability of vat

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This query is : Resolved

CA. Sachin Kumar (Querist)

25 October 2008 Suggestion is required on the following matter:-

Facts:
There are 4 person, the status of the these four is as follows:-
1. A Ltd Co.,
2. Mr.X, an individual
3. Mr.Y, an individual
4. B Pvt. Ltd. Co.
Each four are having one mine at Udaipur. Beacause as per udaipur royalty rules a person can not have more than one mine, so A ltd decide to hold the mine in the name of the other person as mentioned above. each of four will be liable to file royalty return individually.
Mr X & Mr Y, Both are the promoter & Director in A Ltd. & B. Pvt. Ltd.
B Pvt Ltd is to be merged w.e.f. 01.04.08 in A Ltd. & matter is pending with the honr. high court.

Now the query is-----

If there is a MOU between these four person i.e MR.X, Mr.Y,A Ltd. & B Pvt. ltd. that All assets to be used in mining process will be hled by A Ltd & all revenue generated through mining business will be of A Ltd.
Mr. X, Mr .Y & B.Pvt. Ltd will get Rs 5000/- p.m from A Ltd. against use of their name/right in mining.

What will be the sales tax, service tax, & royalty provision in this regard.

Thanks.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

31 October 2008 The agreement with A is for permitting him to use their mine. The consideration for usage of their mine A pays a lease rent of Rs 5000 each. Am I right?

If so, lease tax and service tax would be applicable in my opinion.

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