Is service tax is applicable on hiring of water tanker (lorry mounted) used for industry purpose

[Guest]

My query is that if service tax applicable under which account, and if applicable whether reverse charge is applicable or not??? is there any abatement prescribed for this service.

[KASTURI SETHI]

Only service portion (supply of water) is covered under Section 66 E (i) of the Finance Act.(Declared Services) How service portion is to be computed, it depends upon the nature of the agreement/contract executed between the Service Provider and Service Recipient. No abatement is admissible inasmuch as Service Tax is leviable on only service (supply) of water and service may include rent of water tank also. Reverse charge mechanism will be applicable only if Service Provider is located in non-taxable territory and service receiver is in taxable territory. Otherwise not in normal circumstances.

[Ganeshan Kalyani]

Yes service tax should be only on supply of water service.

[Guest]

Dear Sir,

I received a jcb hiring bill.
In the bill fixed amount & diesel cost are separately mention.

I am confused service tax calculating only hire rent or rent + diesel.

Please suggest.

Thanks & Regards,

Sanjay Vasava

[KASTURI SETHI]

Sh.Sanjay Ji,

It makes no difference whether price/expense of diesel is mentioned separately in the bill or not. Diesel has been consumed while providing taxable service to you. This is in relation to taxable service.Expense on diesel has been incurred in the course of providing taxable service. So as per definition of 'Consideration' in Explanation (a) (ii) to Section 67, expenditure incurred 'in the course of providing' taxable service will form part of taxable value. Hence ST will be paid on rent plus cost of diesel consumed.

[Guest]

Thank you very much sirji.

[Ganeshan Kalyani]

Sir, if I say that in case the bills of diesel charges levied on bill separately is supported with the physical invoices, then will it not called as mere reimbursement and therefore no service tax is warranted. I would be wrong. This is because the reimbursable expense is also made taxable w.e.f. 14.05.2015. Thus, service tax shall be calculated on total invoice value. Thanks.

[Guest]

Thank you sir.

Sanjay Vasava

AI Summary

Taxability of water supply services: service tax covers the supply component and reimbursed operating expenses, including fuel. Service tax applies to the service component of hiring a lorry-mounted water tanker, limited to the supply of water as a declared service under Section 66E(i). Taxable value is determined by the contract allocation; no abatement applies. Reimbursed operating expenses incurred in providing the taxable service, including fuel, form part of consideration and are included in the taxable value. Reverse charge applies only where the provider is in a non-taxable territory and the recipient is in the taxable territory.