Vat Applicability - equipments on rent

[madhavvan n]

where equipments / plant and machinery is given on rent undre mvat law vat is required to be charged ( sinc the lease act has been merged with vat act) as per service tax act any tangible property given on lease is liable for service tax is in these kind of transactions both vat and service tax will be applicable kindly clarify whether this is correct

[Mukesh Kumar]

Supply of tangible goods for use and leviable to VAT / sales tax as deemed sale of goods, is not covered under the scope of the proposed service. Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid.

AI Summary

VAT on leased equipment may apply when possession and control transfer, potentially excluding service tax overlap. VAT applies to supplies of tangible goods for use that amount to a deemed sale and are outside the proposed service scope; whether a lease attracts VAT or service tax depends on factual contract-based determination of transfer of possession and control, with payment or liability for VAT serving as an indicium of correct treatment.