Generator hire charges attracts Vat or service tax

This query is : Resolved

Ranga (Querist)
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11 October 2008 Dear experts,

Please let me know hiring of Generator, goods vehicles using for works contract it will attract vat or service tax.

Since, service tax is applicble on Leasing and hire purchase of goods.

In the same manner, deduction is allowed for hiring of machinery used for carrying out works contract.

Either we can take tax shelter under both service tax as well as vat.

Please give reply for the same urgently

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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11 October 2008 I am not going to touch service tax issues. As regrads VAT is concerned, if the right to use of a movable goods has been transfered against some valuable considertaion, VAT will be applicable.

Ranga

Ranga (Querist)
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11 October 2008 Thanks for reply.

I need simple clarification like

Vat : Deduction is allowed for hiring of machinery, labour and technical services for carrying out works contract. We can take shelter on this not paying vat for hiring of generator, vehicle.

Service tax : is applicable on leasing and hire purchasing of goods.

Considering the above points hire of generator, goods vehicles get tax exemption under both service tax and vat.

Please clarify the same.

Thanks in advance. ....................

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Ranga

Ranga (Querist)
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VASANTH D JAGANATH

VASANTH D JAGANATH (Expert)
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11 October 2008 Dear Sir,

levy of tax on hiring of generator is different and getting deduction under works contract is different.

For levy of tax on lease/hiring of generator attracts when there is possession and control of the generator is given. If the possession and control is not given to another person levy of tax under the entry of right to use does not arises.

With respect to claiming deduction for works contract taxable turnover in my view can be claimed on both the situations