Abansal ( Manager) (121 Points)
11 September 2009hi,
my company owns a building with lift incorporated, which it has given to other company on rent.
we are charging rent on it but not service tax as service tax applicability is in question amoung the supreme court.
now the question is whether the lift is a movable asset or an immovable asset for the purpose of service tax .
kindly advise
Jeevesh Mehta
(Advocate- Corporate Commercial & Indirect Tax Advisory)
(861 Points)
Replied 11 September 2009
Dear Ashima,
It is right that u should not charge service tax on rent of a building.
the question is whether you can exclude the Lift part from the total rent of building and charge service tax ?
If at all lift rent is taxable then it s to be covered under Supply of Tangile goods Service".
For that we have to determine whether LIFT is tangible or Intengible.
Deffinatly its a tangible product.
Now the LIFT is being provided by your company along with the building . According to the provisions of the Supply of Tangible Goods Service if your company is transfering the right to use the Equipment / Lift without transfering the actual or legal right of possession and effective control, you may charge Service tax on its monthly rent . If Lift / equipment is supplied with legal right of possession with effective control then it is treated as Deemed sale and VAT is to be charged.
Apart from the above discussion its a matter of interpritation and dispute whether the LIFT is considered as MAchinery/ Equipment for the purpose of VAT or Service TAx.
It may be possible that Lifts are considered as part of building and nothing can be charged except normal rent.
Regards
CAclubindia
