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St on rent of building + machinery

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Greeshma

Chartered Accountant

25 Points Posted on 10 June 2014

Dear Experts,

We are planning to give on rent one of our factory buildings along wiht machinery and equipments. As per my understanding renting of building is classified under Renting of Immovable property services wiht 12.36% ST. My query is with reference to renting of machinery. Should the same be treated as Supply of Tangible property service? We are not providing any manpower to the lessee. They will be freely operating the machinery as per an agreement. Please clarify if this will attract concept of Deemed sale or Service Tax.

Replies (2)

Harendra Kumar

Tax Advisor

1502 Points Posted on 11 June 2014

It is totaly service tax procedure and law and it is treated as Comercial Properties.

Manoj Agarwal

Service Tax Consultant Rourkela Service

2755 Points Posted on 11 June 2014

Dear Greeshma Ji,

The renting of factory building would come under 'renting of immovable property'.

Regarding, renting of P&M, prima facie it seems to be outside the scope of service tax. Kinldly read supreme court judgement in case of Rashtriya Ispat Nigam Ltd. and if the conditions are satisfied, the same would come under 'transfer of right to use goods' and come under deemed sale as per Article 366(29A) so outside service tax. But as per state law, VAT may be levied by the VAT authorities.