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

Contract carriage exemption may not cover charter or hire, affecting reverse-charge liability on transport services.
Whether a body corporate hiring a non AC motor vehicle for employee transport is liable under the reverse charge mechanism depends on whether the service is a contract carriage exempt from tax or is excluded as a charter or hire. The exemption for non AC contract carriages excludes services described as charter or hire; therefore the contractual terms and factual characterisation of the engagement determine whether the exemption applies or reverse charge liability arises.