Hi,
We are hiring machinery for parties on rental basis for execution of works contract and returning back the machinery after work. We are also issuing our company way bills for bringing in the material from other states. Department says that this will fall under the ‘Right to Use Act“ and VAT is applicable.
Whether such transaction fall under right to use, because the machine registration is in the name of the contractor and the operator is also provided by the contractor and we are only authorized to use the equipment for a specific work. Pls let me know if there is any judgement on this.
Thank You.
Saket
Machinery Rentals for Work Contracts: VAT and Service Tax Implications Under 'Right to Use Act' Spark Debate A company is renting machinery for work contracts and using company way bills to transport materials from other states. The tax department claims this falls under the 'Right to Use Act,' making VAT applicable. The machinery is registered under the contractor's name, and the contractor provides the operator. One respondent states both VAT and Service Tax apply, with VAT being a deemed sale. Another mentions pro-revenue judgments, while a third notes the issue is contentious, suggesting paying either VAT or Service Tax to avoid non-compliance. (AI Summary)
TaxTMI 
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