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vAT OR SERVICE TAX TO BE CHARGED ON RENTING OF MACHINES

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This query is : Resolved

Alok Das (Querist)
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13 March 2009 WE ARE RENTING OUT MACHINES TO OUR CLIENTS IN TWO WAYS (1) MACHINES ARE SUPPLIED TO THE COMPANY AND THEY OPERATE THEM (2) MACHINES ARE SENT ALONGWITH MANPOWER TO RUN THEM. DO WE PAY SERVICE TAX OR VAT?

ALOK DAS

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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13 March 2009 since u r not selling the machines vat does not apply. only service tax applies

K V Subba Rao

K V Subba Rao (Expert)
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14 March 2009 (1) MACHINES ARE SUPPLIED TO THE COMPANY AND THEY OPERATE THEM: In this case, there is 'transfer of right to use'. This is treated as deemed sale and subject to VAT, even if there is no transfer of property

(2) MACHINES ARE SENT ALONGWITH MANPOWER TO RUN THEM: In this case, client is 'allowed to use' or 'permitted to use' or 'right to access'. This is subject to Service Tax under category :Supply of tangible goods for use"

Refer Chapter 94 of 11th edition Taxmann's Service Tax Ready Reckoner by Sri V S Datey

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