Chaging mvat on lease item

This query is : Resolved

venkat (Querist)
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27 July 2014 dear sir we are arranging walkie talkies on hire basis to our clients on tax view we are charging mvat @5%. one of the client is asking us why u r charging mvat instead of service tax. we clearly explained on mvat act . but customer is not convinced . pls provide act copy and section

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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27 July 2014 In the case of lease transactions ST is not applicable.Lease is a transfer of right to use.Here you entrusting the gadget to the full control of the customer,and therefore ,it is not a hiring but transfer of right to use.If the shared goods are in your control,like a bus ,taxi,earth mover etc,then it is hiring and taxable for ST and not VAT.Now you have to decide on what conditions you have let out the instrument and taxability under ST or VAT....mjk