Query Regarding Service Tax-Urgent
Dear Member
A company hires the Sumo for the daily pick & drop facilities for the
employee (from home of the employee to place or work and vice versa). The
party from whom the car is hired is an individual entity & not registered
under service tax as the annual turnover is below the basic exemption limit.
My query is whether reverse mechanism is applicable to company & if yes what
is the percentage on which tax is to be paid
Again the company hires truck/three wheeler van etc for the purpose of
transportation of the goods from the one gowdown to another. Such
facilities is taken from the individual operators who are not registered
with Service tax. Is reverse mechanism is apply in this case. If yes what is
the percentage on which tax is to be paid.
An urgent reply is required together with related circulars/references.
With Regards
Ganesh
Reply:1
Dear Mr. Khemka,
This is with reference to the query raised in the trailing mail.
In regard to Sumo being used for daily pick & drop facilities for the
employees, kindly note that Entry No. 7 of Notification no. 30/2012-ST dated
20-06-2012 provides that in case of renting or hiring of motor vehicle by
individual, HUF, Proprietary Firm or Partnership Firm (incl. AOP), Service
Tax will be payable by the recipient of Service provided recipient of
service is a business entity registered as body corporate. The Service
Recipient would be liable to pay Service Tax on 40% of the value of Total
Service Consideration [without considering abatement, if any, availed by the
Service Provider] paid to the Service Provider.
In respect to hiring of truck for the purpose of transportation of the goods
from the one godown to another, please note that the liability to pay
Service Tax is on Consignor/ Consignee paying freight, if the same is a
factory, registered excise dealer, body corporate, partnership firm or AOP
[after availing the abatement of 75% available as per Entry No. 7 of
Notification no. 26/2012-ST dated 20-06-2012]. Further, please note that the
liability of Service Tax as a Service Recipient crops up only if the Goods
Transport Agency issues a consignment note or an equivalent document.
The payment of freight made directly to Truck Owners &/or Operators, who do
not issue any Consignment Note, would not be leviable to Service Tax. While
presenting the budget in the Financial Year 2004 on 08-07-2004, the Hon'ble
Union Minister of Finance specifically clarified on the floor of the
Parliament that the Government did not have any intention in subjecting the
'individual truck owners' to Service Tax. Hence, it is an undisputed fact
that the intention of the Central Government was to levy service tax only on
'Goods Transport Agency', which is in the business of booking cargo and
issuing the consignment note in the normal course of their business and not
'individual truck owners'. Further, there are a plethora of judgments,
wherein it has been clearly held that services provided by individual truck
owners are not liable to Service tax under the category of 'Goods Transport
Agency'. Recently, the Hon'ble Delhi Tribunal in the case of Bazpur
Co-operative Sugar Factory Ltd. vs. CCE 2012 (27) S.T.R. 517 (Tri.-Del.) had
also upheld the same view. Hence, the irrefutable legal position stands that
there is no levy of service tax on services rendered by 'individual truck
owners &/or operators'.
Hope the above clarifies your queries. In case you require any further
clarification &/or information, please let me know.
Thanks & Regards,
CA Vikram Khaitan
Director- ARV Advisory Services (P) Ltd.
------------------------------------------------------------
D: +91-33- 2213 7625 / 3022 4196; M: +91-98315 86568
Email: vikram@arvsolutions.co.in /
info@arvsolutions.co.in
Reply:2
Dear Mr. Ganesh Khemka,
As this service falls under rent a cab service so reverse charge @ 40% will be applicable and the company has to pay the service tax as service recipient.
There will be no reverse charge on hires truck/three wheeler van etc in your case as it doesnot falls under GTA service.
In case you need any further clarification, please let me know.
Thanks & Regards
CA Sumit Kr Agarwal
9903979735
Reply:3
Dear Ganesh,
In reference to the captioned query, kindly find below my views to the same.
On the transportation of employees the Company shall be liable for Service
tax on reverse charge basis @ 40% of the taxable value.
On the transportation of goods, since the company is not availing any GT
agency (GTA) services, no service tax liability on the same on reverse
charge mechanism.
Requesting senior / learned members to clarify if my point of view is
incorrect.
Thanks and Regards,
CA Deepak Agarwal.
Reply:4
In case of service of renting of motor vehicle designed to carry passenger for service to be taxable the service provider must be IND/ HUF/ Firm/AOP and the service recipient must be body corporate. Service tax is payable on 40% of the value of service. If the service provider avails abatement then the service receiver has to pay 100% tax. If the service provider do not avail abatement then service provider has to pay tax of 60% and service receiver 40%. Even if the service provider is SSP the service recipient has to discharge his liability.
shashi chirania
Dear Member
A company hires the Sumo for the daily pick & drop facilities for the
employee (from home of the employee to place or work and vice versa). The
party from whom the car is hired is an individual entity & not registered
under service tax as the annual turnover is below the basic exemption limit.
My query is whether reverse mechanism is applicable to company & if yes what
is the percentage on which tax is to be paid
Again the company hires truck/three wheeler van etc for the purpose of
transportation of the goods from the one gowdown to another. Such
facilities is taken from the individual operators who are not registered
with Service tax. Is reverse mechanism is apply in this case. If yes what is
the percentage on which tax is to be paid.
An urgent reply is required together with related circulars/references.
With Regards
Ganesh
Reply:1
Dear Mr. Khemka,
This is with reference to the query raised in the trailing mail.
In regard to Sumo being used for daily pick & drop facilities for the
employees, kindly note that Entry No. 7 of Notification no. 30/2012-ST dated
20-06-2012 provides that in case of renting or hiring of motor vehicle by
individual, HUF, Proprietary Firm or Partnership Firm (incl. AOP), Service
Tax will be payable by the recipient of Service provided recipient of
service is a business entity registered as body corporate. The Service
Recipient would be liable to pay Service Tax on 40% of the value of Total
Service Consideration [without considering abatement, if any, availed by the
Service Provider] paid to the Service Provider.
In respect to hiring of truck for the purpose of transportation of the goods
from the one godown to another, please note that the liability to pay
Service Tax is on Consignor/ Consignee paying freight, if the same is a
factory, registered excise dealer, body corporate, partnership firm or AOP
[after availing the abatement of 75% available as per Entry No. 7 of
Notification no. 26/2012-ST dated 20-06-2012]. Further, please note that the
liability of Service Tax as a Service Recipient crops up only if the Goods
Transport Agency issues a consignment note or an equivalent document.
The payment of freight made directly to Truck Owners &/or Operators, who do
not issue any Consignment Note, would not be leviable to Service Tax. While
presenting the budget in the Financial Year 2004 on 08-07-2004, the Hon'ble
Union Minister of Finance specifically clarified on the floor of the
Parliament that the Government did not have any intention in subjecting the
'individual truck owners' to Service Tax. Hence, it is an undisputed fact
that the intention of the Central Government was to levy service tax only on
'Goods Transport Agency', which is in the business of booking cargo and
issuing the consignment note in the normal course of their business and not
'individual truck owners'. Further, there are a plethora of judgments,
wherein it has been clearly held that services provided by individual truck
owners are not liable to Service tax under the category of 'Goods Transport
Agency'. Recently, the Hon'ble Delhi Tribunal in the case of Bazpur
Co-operative Sugar Factory Ltd. vs. CCE 2012 (27) S.T.R. 517 (Tri.-Del.) had
also upheld the same view. Hence, the irrefutable legal position stands that
there is no levy of service tax on services rendered by 'individual truck
owners &/or operators'.
Hope the above clarifies your queries. In case you require any further
clarification &/or information, please let me know.
Thanks & Regards,
CA Vikram Khaitan
Director- ARV Advisory Services (P) Ltd.
------------------------------------------------------------
D: +91-33- 2213 7625 / 3022 4196; M: +91-98315 86568
Email:
Reply:2
Dear Mr. Ganesh Khemka,
As this service falls under rent a cab service so reverse charge @ 40% will be applicable and the company has to pay the service tax as service recipient.
There will be no reverse charge on hires truck/three wheeler van etc in your case as it doesnot falls under GTA service.
In case you need any further clarification, please let me know.
Thanks & Regards
CA Sumit Kr Agarwal
9903979735
Reply:3
Dear Ganesh,
In reference to the captioned query, kindly find below my views to the same.
On the transportation of employees the Company shall be liable for Service
tax on reverse charge basis @ 40% of the taxable value.
On the transportation of goods, since the company is not availing any GT
agency (GTA) services, no service tax liability on the same on reverse
charge mechanism.
Requesting senior / learned members to clarify if my point of view is
incorrect.
Thanks and Regards,
CA Deepak Agarwal.
Reply:4
In case of service of renting of motor vehicle designed to carry passenger for service to be taxable the service provider must be IND/ HUF/ Firm/AOP and the service recipient must be body corporate. Service tax is payable on 40% of the value of service. If the service provider avails abatement then the service receiver has to pay 100% tax. If the service provider do not avail abatement then service provider has to pay tax of 60% and service receiver 40%. Even if the service provider is SSP the service recipient has to discharge his liability.
shashi chirania
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