Servive Tax On Rent-Cab-Motor Operator

[VAMSI KRISHNA]

Sir,

'ABC Ltd' is a seven star deluxe hotel (Providing accomidation as well as food). 'B' is a customer who check in hotel. 'B' whants to go outside for to attened a meeting which is 200 kms from hotel. 'B' asked hotel to arrange transportation for the same. 'ABC Ltd' does not having any owned cabs so they approched 'C' for to arrange the cab (Car). 'C' sent the car to hotel and 'B' attended meeting and come back to hotel. 'B' not paid any payment to 'C'. 'C' billed to 'ABC Ltd' and 'ABC Ltd' billed to 'B'.

Now my Doubt is???

1) if 'C' is individual.... as per 68(2) of finance act 1994.. who is going to liable to pay tax ??????

2) whether we can treat 'ABC Ltd' as a rent a cab operator for applicability of 68(2)??

AI Summary

Reverse charge on rented passenger vehicle services: hotels generally liable unless acting as rent a cab operators.
The hiring of a passenger vehicle by an individual operator to a hotel for a guest is a declared service; when the provider is an individual and the receiver is a corporate business not in the similar line of business, the hotel (service receiver) is ordinarily liable to pay service tax under the reverse charge mechanism. If the hotel demonstrably operates as a rent a cab provider for the transaction, the similar line of business exception applies and reverse charge does not attach. CENVAT credit availability for the hotel must be tested against Board guidance and CENVAT rules and may be restricted.