Please comment on the following situation under Kerala vat.
1)An agreement between a hospital and lab consumable supplier.
2)Lab consumable supplier lets out a lab equipment costing Rs.40 lacs to hospital free of cost.
3)In return hospital purchases minimum of Rs.25 lacs consumable every year.
Hospital situated in Kerala
Lab consumable supplier : Bangalore
Both are registered dealers under vat of respective state.
Now regarding, delivery/transport of capital goods from Bangalore to Kerala.
Since there is no consideration for transfer of lab equipment,
Bangalore supplier insists Hospital in Kerala to sign the deceleration in Form 16,stating hospital as the owner of equipment and state transfer as for not for sale.
However , hospital is bound to return lab equipment after 5 years.
Whether hospital liable for penalty under 70B of Kerala vat or is there any other implication under Kerala VAT.
Please suggest method through which delivery can be made by supplier.
