Category - Parking fees - Liability of Contractor or municipal body

[sunil mehta]

Dear Sir, Municipal authorities gives contract under 'pay & park' scheme at different locations of city to different contractors.The contractor collects parking fees from public(as per rates decided by municipal auth.)The contractor pays Rs.30 lacs to mun.auth. as licence fees(non refundable)for allowing contractor to collect parking fees for a specified period. Query:1)Under what category does the above service fall? 2)If it is liable to s.tax ,then whether mun.body & contractor both are liable or only contractor? Note:The amount of parking fees collected by contractor is his sole income and he has not to share with mun.body.only licence fees has to be paid by him. Thanking you, sunil mehta

[Surender Gupta]

Service provided by a contractor in relation to parking lots is liable to service tax under "Management, Maintenance or Repair" category. Fees payable to Municipal authorities is not taxable.

[Madhukar N Hiregange]

The fees by municipal corproation in my view does not seem to be covered under service tax provisions as on date. Even the parking charges may not be covered as I see. It maybe advisable to write to the department and nesure that the same is sent under registered post acknowledgement due.

AI Summary

Service tax on parking management may apply to contractor-operated pay-and-park schemes, with licence fees treated separately. A contractor operating municipal pay and park schemes collects public parking fees and pays a non refundable licence fee to the municipality; one view classifies the contractor's parking operation as a taxable service under Management, Maintenance or Repair while excluding the municipal licence fee from service tax, whereas an alternate view contends that neither the licence fee nor parking charges may currently fall under service tax and advises seeking departmental clarification.