Service Tax on Car Lease

[Kaustubh Karandikar]

XYZ Ltd. taking car on lease from an Individual and give it to the management employees for official use. This is part of their perquisites and mentioned in their contract. The individuals are paid lease rent by XYZ on Voucher and they don’t charge service tax to XYZ. During Excise & Service Tax audit by the department, they are asking XYZ to pay Service tax under reverse charge on the same under the category Rent – a – cab. Any defence possible?

AI Summary

XYZ Ltd. faces service tax demand under reverse charge for 'Rent-a-Cab' services per Notification No. 30/2012-ST. XYZ Ltd. is leasing cars from individuals to provide them to management employees as part of their employment benefits. The individuals do not charge service tax to XYZ. However, during an audit, the tax department is requiring XYZ to pay service tax under the reverse charge mechanism for the service category 'Rent-a-Cab.' Replies from forum participants indicate that the department's demand is supported by case law and legal definitions, and the reverse charge mechanism is applicable as per Notification No. 30/2012-ST. There seems to be no viable defense against the department's claim.