tnvat credit on lease rental charges-reg

[Ramakrishnan Seshadri]

Dear Sir,

We are purchasing lpg for manufacturing our finished products. For storage of the lpg the supplier has supplied storage tanks for storing the lpg. For this they are charging lease rental charges and charging vat 14.5% under tnvat.

Our question is whether the vat paid on this lease rental charges is eligible for vat input credit under tnvat.

Awaiting the reply.

Thanks and REgards,

S.Ramakrishnan.

AI Summary

Input tax credit on leased storage tanks allowed where tanks are used in manufacturing, subject to TNVAT capital-goods conditions.
VAT charged on lease rentals for storage tanks used to store LPG for manufacturing may qualify as input tax credit under TNVAT because the tanks are goods used in the production process. Credit availability is subject to the capital-goods/production-use principles in the TNVAT credit framework and to any phased utilisation rules applicable to capital-type assets, even where the asset is leased rather than purchased.