Service ta Liability on hiring mtor(Non AC) Vehicle

[Srivatsan Krishnamachari]

Dear Learned Friends,

A Body Corporate hires the service of a transport Operator(Individual) who has license to run his vehicle from RTA as a contract carriage, for transporting the employees of the said Body Corporate from a particular point to its place of work(factory) where no public transport facility is available. Should the Body Corporate pay service tax under reverse charge mechanism on 40% value of the Bill raised by the Individual Transporter who runs the contract carriage service.Are not Contract Carriers exempted from the definition of 'Rent a Cab or Motor vehicle.

Kindly clarify.

Thanks and With Regards,

K.Srivatsan

AI Summary

Clarification on service tax for non-AC contract carriages: Exemption applies unless service is for 'charter or hire' purposes. A body corporate inquired about the obligation to pay service tax under the reverse charge mechanism on 40% of the bill from an individual transport operator for non-AC contract carriage services used to transport employees. The query questioned whether such services are exempt from being classified as 'Rent a Cab or Motor vehicle.' The response clarified that non-AC contract carriages are generally exempt under entry 23(b) of notification 25/2012-ST, but this exemption does not apply if the service is for 'charter or hire,' making the contract terms crucial to determining tax liability.