Renting of generator set / dumpers etc.

[Common Issues]

‘X’ has obtained the generator set, vehicles (Dumper) and Machinery for loading and unloading of coal from ‘Y’. ‘X’ pays the rent on monthly basis for these machines. The staff and all the repair and maintenance of the vehicle and machinery is born by the owner (‘Y’)of such vehicles and machinery. Cost of Diesel is born ‘X’. 

Whether there can be any sales tax or service tax liability on that transaction in the hands of 'X' or 'Y'?

AI Summary

Dispute Over Taxation: Service Tax Applies to Equipment Rental Without Control Under Supply of Tangible Services, Section 65B. 'X' rents a generator set, dumpers, and machinery for coal handling from 'Y', with 'Y' responsible for staff and maintenance, while 'X' covers diesel costs. The discussion revolves around whether sales tax or service tax applies to this transaction. Neeraj Kumar explains that if 'X' does not have possession and control, service tax applies under the supply of tangible services. Pradeep Khatri notes that taxability depends on who has effective control, affecting whether service tax or VAT applies, and mentions CENVAT credit eligibility. Neeta Shete concludes that 'Y' is liable for service tax, but 'X' may not claim CENVAT credit.