Plant & Machinery On rent

[Ashok Chopra]

I have given my entire unit on Lease. I am charging Rs. 200000 on account of Lease Rent  of Land and Building and Charging Service Tax.  Also charging Rs. 300000 on account of Lease rent of Plant and Machinery.

My Queries:-

1. Whether VAT and Service Tax both will be charge on Lease Rent of Plant and Machinery or any one from above,  either VAT or Service Tax?

2. If both will be charge, how first Service Tax and thereafter VAT on both amount (Lease Rent+Service Tax) or first VAT and thereafter Service Tax on both amount (Lease Rent+VAT).

3. Please also provide me the copy of notification/clarification/guideline, order or judgement of the court with regard to above.

Thanks and regard

AI Summary

Understanding VAT vs. Service Tax on Lease Rent: Control Determines Applicability - Lessee Control Invokes VAT, Otherwise Service Tax. A user inquired about the applicability of VAT and Service Tax on lease rent for plant and machinery, questioning whether both taxes apply and the sequence of their application. The response indicated that the applicability depends on who has effective control over the plant. If the lessee has control, VAT applies; otherwise, Service Tax is applicable. The terms of the lease agreement are crucial in determining the tax liability. A relevant judgment from the Madras High Court was mentioned to support this explanation.