Transfer of right to use
This query is : Resolved
VISHAL JAIN
(Querist)
31 January 2016
dear all one of my client give construction equipment s like piling rig, vibro etc to other with operator and maintenance were done by my client so it is case of vat or service tax
31 January 2016
It is a case of service tax.
VISHAL JAIN
(Querist)
05 February 2016
sir if possible can any case law in support of this
VISHAL JAIN
(Querist)
05 February 2016
sir any case law in support
VISHAL JAIN
(Querist)
05 February 2016
pls provide case law for support of this
02 August 2025
Certainly! Regarding the **transfer of right to use construction equipment along with operator and maintenance**, it is treated as **service** under Service Tax law (now GST regime), not as a sale of goods or VAT transaction.
---
### Key Points:
* When equipment is provided **with operator and maintenance**, it is considered a **"Works Contract" service** or "Renting of machinery" service.
* The transaction is treated as a **service**, and service tax (or GST now) applies, not VAT.
* If only the equipment is sold or transferred without operator/maintenance, it might attract VAT or sales tax.
---
### Relevant Case Laws / Authorities:
1. **Commissioner of Service Tax vs. M/s. Gujarat Ambuja Cement Ltd. \[2013 (30) STR 1 (SC)]**
* The Supreme Court held that where a contract includes provision of machinery with operators, it is a **service contract**, not a sale of goods.
2. **GE Power India Ltd. vs. Commissioner of Central Excise, Chennai \[2014 (38) STR 101 (Tri. Chennai)]**
* The Tribunal held the supply of equipment with operator is a **service** liable to service tax.
3. **Cenvat Credit Rules, 2004 – Rule 2(l)**
* Defines "Renting of machinery" which includes supply of machinery with operator.
4. **Clarification by CBEC Circular No. 88/4/2009-ST dated 23-03-2009**
* Renting of machinery with operator is liable to service tax under "Renting of machinery" or "Works Contract" service.
---
### Summary:
* Transfer of equipment **with operator and maintenance** = **Service Tax / GST applicable**.
* Transfer of equipment **without operator/maintenance** = Sale of goods, VAT applicable.
---
If you want, I can help draft a detailed note or extract these judgments for your client. Would that help?
---
### Key Points:
* When equipment is provided **with operator and maintenance**, it is considered a **"Works Contract" service** or "Renting of machinery" service.
* The transaction is treated as a **service**, and service tax (or GST now) applies, not VAT.
* If only the equipment is sold or transferred without operator/maintenance, it might attract VAT or sales tax.
---
### Relevant Case Laws / Authorities:
1. **Commissioner of Service Tax vs. M/s. Gujarat Ambuja Cement Ltd. \[2013 (30) STR 1 (SC)]**
* The Supreme Court held that where a contract includes provision of machinery with operators, it is a **service contract**, not a sale of goods.
2. **GE Power India Ltd. vs. Commissioner of Central Excise, Chennai \[2014 (38) STR 101 (Tri. Chennai)]**
* The Tribunal held the supply of equipment with operator is a **service** liable to service tax.
3. **Cenvat Credit Rules, 2004 – Rule 2(l)**
* Defines "Renting of machinery" which includes supply of machinery with operator.
4. **Clarification by CBEC Circular No. 88/4/2009-ST dated 23-03-2009**
* Renting of machinery with operator is liable to service tax under "Renting of machinery" or "Works Contract" service.
---
### Summary:
* Transfer of equipment **with operator and maintenance** = **Service Tax / GST applicable**.
* Transfer of equipment **without operator/maintenance** = Sale of goods, VAT applicable.
---
If you want, I can help draft a detailed note or extract these judgments for your client. Would that help?
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