Service Tax for Lease of Packaging Equipments

[Guest]

We are leasing the Metal Pallets to various mfg industries on lease and the control and possession of the said equipments while on lease period lies with the customer. We currently charge VAT as well as Service Tax and some companies are advises that if the control and possession lies with the customer( not the service provider) there is no service tax payable. Please clarify.

AI Summary

Service Tax Applicability on Leasing Metal Pallets Hinges on Control and Possession by Lessor or Customer A query was raised regarding the applicability of service tax on leasing metal pallets to manufacturing industries, where the control and possession of the equipment lie with the customer during the lease period. The question was whether both VAT and service tax should be charged. The response clarified that the applicability of VAT or service tax depends on who holds effective control and possession. If the lessor retains control, service tax is applicable; otherwise, it is not.