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Hire of machinery

This query is : Resolved 
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(Querist)
14 July 2008
We are giving construciton equipment on rent to any person without transferring right of possession and effective control of such machinery with in India . The machinery operation and maintainence is with us i.e our operator's do the work as per the requirement of the client.

Please advise the applicability of the VAT on the said transactions across India.


Further can we take the MODVAT credit on equipment purchased and use the said credit against the Service Tax Liability
thanks
ravi bhatnagar
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annapurna

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annapurna (Expert)
14 July 2008 When your company is giving construction equipment on rent to any person without transferring right of possession and effective control of such machinery within india, then it will have implications of service tax and not VAT and it will be liable to service under Right to use service. Your company can avail the CENVAT credit on equipment as it is used in provision of output service
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