Hire vehcile on lease

[Samik Chaudhuri]

Sir

Our logistics company wants to hire 6nos truck with agreement for monthly fixed amount from a Company. Now i would like to know whether this fixed amount attracts service tax or not? If attracts who will be liable to pay service tax? Please advice me at earliest.

With thanks

Samik Chaudhuri.

[KASTURI SETHI]

Yes. Service Tax is leviable under Section 66 E (f) . It is declared service. Service Provider will deposit ST after collecting from the Service Receiver.

[Himansu Sekhar]

if the vehicles will be put for GTA service, there will be no servicetax. Otherwise s.tax will be applicable

[KASTURI SETHI]

Both are different services under different accounting codes.

[Samik Chaudhuri]

Sir

I would like to clarify my queries that these 6nos truck will be used for transportation. Now we have to pay monthly fixed amount to owner of the Vehicle as per agreement, my query is that whether this amount attracts Service Tax or not? Please advice me.

With thanks

Samik Chaudhuri.

[Himansu Sekhar]

It depends upon the use of the vehicles by the service provider. Please read the following provisions of Notf. no. 25/12

22. Services by way of giving on hire -

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods;

If it will be used for other that this, tax will be pid by you.

Regards

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir view.

AI Summary

Service tax on vehicle hire applies unless hire qualifies as goods transport agency or state transport exemption. Fixed monthly payments for hiring trucks are generally subject to service tax as a declared service, with the service provider liable to collect and deposit the tax; exceptions exist where the hire qualifies as service to a goods transport agency or to a state transport undertaking for vehicles carrying more than twelve passengers under the relevant notification, in which case service tax may not apply.