Hiring of Motor Vehicles

[RAM SHARMA]

Dear Experts,

As per service tax notification no. 30/2012 dt. 20/06/2012 Hiring of motor vehicles to carry passenger on abated value and non abated value under reverse charge machenism.

What is the meaning of abated value and non abated value for calculation of service tax. Secondly we have hiring bus for our workers on some collection of Employees contribution and some payment made by company. In this case, is company is liable for service tax under reverse charge.

Thanks 

AI Summary

Abated value rule for passenger transport affects reverse charge liability, input credit entitlement and tax allocation between provider and receiver.
Abatement for passenger transport services means only the balance 40% is taxable while non abated treatment makes 100% taxable. If the provider applies abatement and charges tax only on 40% they cannot take Cenvat input credit; if the provider treats the service as non abated and charges tax on 100% they can take Cenvat input credit. Under the described reverse charge mechanics, a transporter availing input credit charges tax on 60% and the recipient pays tax on 40%, whereas if the transporter does not avail input credit the recipient is described as liable to pay tax on the full value.