TaxTMI 
TaxTMI 
Dear Sir,
I want to know, Taxes applicable on the material issued to Contractor on returnable basis for fixed period and charged a fixed amount to the contractor for the same.
Sudhakar Sinha
Material issued on returnable basis
23 Jan 2017 
7 Replies 
9782 Views Asked by
Cenvat credit on capital goods supplied to contractors may require reversal if not returned within specified statutory period.
If materials supplied on a returnable basis to a contractor qualify as capital goods, CENVAT credit is allowable provided records show the goods are returned within the statutory return period; failure to return within that period requires reversal of the attributable CENVAT credit, with entitlement to reclaim upon return. Additionally, where effective control or possession lies with the customer the supply may constitute a deemed sale attracting VAT. (AI Summary)
If materials supplied on a returnable basis to a contractor qualify as capital goods, CENVAT credit is allowable provided records show the goods are returned within the statutory return period; failure to return within that period requires reversal of the attributable CENVAT credit, with entitlement to reclaim upon return. Additionally, where effective control or possession lies with the customer the supply may constitute a deemed sale attracting VAT. (AI Summary)