Pls clary whether to Charge Service Tax or VAT or Both

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2010 Hi,
We want to know whether the rental of computers on Daily/Weekly/Monthly basis attracts Service Tax/VAT or Both?.

Some people say it's applicable under KVAT (Karnataka VAT) as the VAT is applicable on transfer of right to use of goods - some one told us there was also a court ruling in the favor of KVAT act from High Court b/w VAT comissioner and ISRO & Some say it comes under Service tax.

Please clarify which is the correct tax applicable & their reference if any.

Thank and Regards

Shyam Lal Naik

Shyam Lal Naik (Expert)
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04 May 2010 Service and VAT are mitually exclusive. Once VAT is charged, service tax can not be charged on that portion. It has been held so in a number of judgment.

In case of renting of movables, if the effective possession and control is transfered, VAT is applicable. In case effective posession and control is not transfered, Service Tax is attracted.

Since, in the case of hiring of PCs, effective possession and control are transfered, VAT shall be charged, in my view.

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2010 Mr. Shyam Lal,

Many thanks for your reply, We would like to know under what section/caluse of SERVICE TAX act the details "effective possession and contril of goods" are given. It will be easier for us to keep a copy of the same in our office we can also keep a tab on the latest developments.

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Shyam Lal Naik

Shyam Lal Naik (Expert)
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04 May 2010 Please refer para 4.4 of Circular No. D.O.F. No. 334/1/2008-TRU dated, 29/02/2008.