VAT On the transfer of the right to use any goods for any purpose,
Vishal Upadhyay
(Querist) 05 May 2011
This query is : Resolved
Dear All,
We have laid gas pipeline in the year 2009-10 for our own manufacturing of ceramic sanitary ware. The same pipe line we want to use for supply of GAS to other company.
We are charging ST @ 10.3% but my query is whether we have to charge VAT on total value? If yes at what %?
R.Ramachandran
(Expert) 05 May 2011
Dear Mr. Vishal,
If the pipe line has been laid, then it becomes an immovable property. It does not remain 'goods' anymore. Therefore, where from the question of 'right to use goods' arises in the situation given by you?
Only after finding an answer to this basic query, subsequent queries would arise. Otherwise not.
Vishal Upadhyay
(Querist) 05 May 2011
But goods defination includes "all intangible commodities and growing crops, grass, standing timber or things attached to or forming part of the land",
abhay dholakiya
(Expert) 05 May 2011
ya Mr Ramachandram is absulatly right laid pipeline is immovable property
G. ARAVINTHAN
(Expert) 05 May 2011
It is embedded in to earth and comes within the meaning of immoveable property under Transfer of Property Act.
R.Ramachandran
(Expert) 05 May 2011
Dear Mr. Vishal,
I think you are quoting the definition of "goods" from your memory and not from legal text.
Vishal Upadhyay
(Querist) 05 May 2011
Dear Sir,
full defination of goods under Gujarat VAT Act : “goods” means all kinds of movable property (other than newspapers,
actionable claims, electricity, stocks and shares and securities) and
includes live stocks, all materials, articles and commodities and every
kind of property (whether as goods or in some other form) involved in
the execution of works contract, all intangible commodities and growing crops, grass, standing timber or things attached to or forming part of the land, which are agreed to be severed before sale or under
the contract of sale;.
Vishal Upadhyay
(Querist) 05 May 2011
other opinion says it's considered as 'deemed sale' on which VAT is appli.
soumitra basu
(Expert) 05 May 2011
This is a debatable question whether something fixed on earth shall be treated as immovable property. Standing Tree is not an immovable property. Machinery, though fixed on earth can not be said as immovable property.
In my opinion you are selling gas and pipeline is only carrying the gas. You must have charge for the gas. If you do not charge anything for the transportation through pipeline, I think vat shall not be attracted.
Guest
(Expert) 06 May 2011
Dear Mr. Vishal,
Pipeline embedded in earth is neither a movable roperty nor goods, rather that is an immovable property. Still further, it is a capital asset of your company and you would also be charging depreciation on that. Thus, that does not fall within the purview of goods.
So, you cannot treat the pipeline as goods. You can deal with costing of gas only for the purpose of supply. However, if you want to charge some rent for the use of pipeline that you can do, but the total cost of pipeline would not attract any VAT.
MUKESH SHARMA
(Expert) 15 May 2011
vat will be charged if property passes to client or contrcatee
