There are companies deliver equipments to customer without collecting any money under the condition that the customer will procure raw material for a value during the period agreed at the time of delivery. (for example icecream cos supply freezer at free of cost and the customer agree to by ice cream from the co for a future period) Agreement may be for a period of 4 to 5 years and ownership of the equipment will remain with company throughout the period. As there is no transfer of ownership involved in it VAT is not collecting on the same. Since no rent is collecting from the party service tax is also not collecting on the same same.
Can anyone advise what is the correct treatment in this situation so that neither Sales tax dept nor service tax department will not raise any objection?
CAclubindia
