Vat and service tax on lease

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Ankit Jain (Querist)
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06 June 2014
I have a client (A) in Delhi who has a customer (B) in Haryana. B has a Factory in Haryana which requires Hydrogen Gas for its manufacturing activities.

A shall invest and manufacture the Plant in Delhi or Noida and install the same at B's Factory in Haryana. The Plant will generate Hydrogen Gas. For the production of Hydrogen Gas, A will supply Ammonia which is a Raw material to produce Hydrogen. B shall use the Hydrogen for its manufacturing activities.

A's technical team shall maintain and operate the Plant at B's Factory.

The Ownership of the Plant will be with A, however B will have the right to use the Gas.

A will charge B Certain Amount as Lease rental calculated on the basis of the amount of gas used by B which will be recorded by a meter reading in cubic meters (say 100 cubic meters)

I want to know the VAT and Service Tax Implications on the above transaction.

Amit Jolly

Amit Jolly (Expert)
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08 June 2014 In Sales defination right to use has been also added. So if A giving right to use the Hydrogen plant to B than that transaction should be covered in Sales tax embibt and CST has to be implemented on it.

Lease is covered under service tax......will later revert to you about this.