Service Tax for Lease of Packaging Equipments, Service Tax

[MADHAVAN MC]

We are leasing the Metal Pallets to various mfg industries on lease and the control and possession of the said equipments while on lease period lies with the customer. We currently charge VAT as well as Service Tax and some companies are advises that if the control and possession lies with the customer( not the service provider) there is no service tax payable. Please clarify.

Posts / Replies

[Pradeep Khatri]

Applicability of VAT or Service Tax on the transfer of right to use or supply of tangible goods will depend on the Effective Control and possession.

If the Effective Control and possession of goods/equipment/Machinery lies with you then service tax will be applicable otherwise it will attract Service Tax.