computation of service tax on equipment leasing

[JAGANATHAN KUMARAVEL]

Please let me know whether serive tax has to be levied on the equipments leased by a manufacturing company to its associate Company.  Iin the State of Karnataka VAT is being charged on the  Lease Rental ( Depn+Int charges)

If service tax is applicable  what is the abatement available.  

 

AI Summary

Supply of Tangible Goods Service: service tax may apply to equipment leasing absent transfer of possession or control.
Whether service tax applies to equipment leasing depends on transfer of possession/control. If there is no transfer of possession or effective control, the lease may attract service tax as a Supply of Tangible Goods Service per Ministry guidance; where possession or effective control is transferred, VAT alone applies to lease rentals. Practitioner replies in the discussion conflict on the applicability of service tax when transfer of possession/control is absent, and no abatement guidance is provided.