Vehicle Hire Charges

[Sanjeev Sharma]

M/S XYZ have given 2 BUSES on agreed monthly rent to M/S ABC and all the running and maintenance cost are borne by the M/S ABC . Vehicles are driven by the drivers of M/S ABC. Tourist permit to run these buses are also in the name of M/S ABC.Is M/S XYZ who have given just their buses on rent are liable for service tax under rent a Cab

[NANDKUMAR SAGWEKAR]

In this case right to use are given by XYZ to ABC ,so does not fall under RENT A CAB Service but please another service tax category Supply of Tangible goods and also verify the provisions of VAT ( lease ) Right to use any goods for any purpose . Anand Shembekar cell 9209904370

[Surender Gupta]

I agree with Mr. Anand Shembekar, the activity of letting out buses on rent to another person in the manner as specified in the query is not a rent a cab service. It may be taxable under service tax under supply of tangible goods if not taxable under VAT

[Guest]

In my view, the same would be taxable under VAT only. This transaction doesn't fall under Supply of tangible goods for use service since XYZ has transferred possession and control of goods to ABC, as appeared from the question. Therefore, the same would be covered under VAT. However, I would also suggest that agreement should be carefully scrutinised before arriving at any conclusion on excluding the transaction under RENT A CAB.

AI Summary

Right to use vs transfer of possession determines rent-a-cab classification and tax treatment under VAT or service tax. Where an owner grants the right to use buses and transfers possession and control to the hirer, the transaction typically does not qualify as rent a cab and may be taxable under supply of tangible goods or subject to VAT/lease treatment; careful scrutiny of the agreement and applicable VAT provisions is required to determine the proper tax classification.