Applicability of service tax

[vaibhav bale]

Mining machinery like excavators, wheel loaders, etc are given on hire by our company on hourly basis. Bills are raised per hour basis. The Hirer uses the machinery for preparation of site for his forthcoming project. Are we rendering site preparation service?

[Guest]

This activity will be covered in the 'service of supply of tangible goods for use' recently proposed in the Budget 2008, if you are not making payment of VAT on the charges already.

AI Summary

Supply of tangible goods for use: hiring mining machinery for site preparation qualifies as service where VAT is not paid. Hiring mining and construction machinery for site preparation qualifies as the service of supply of tangible goods for use under the proposed service tax provision, provided the supplier has not paid value-added tax on the hire charges.