Applicablity of Service Tax Rate

[BAL KRISHAN GARG]

Dear All Members,

I have one query regarding chargability of Rate of Service Tax applicable to the Proprietory Firm . Mr. A , who is the owner of a travel agency and is in the process  of going with an agreement with a company for carrying its employees from different point of delhi and leave them in company office in Greater Noida . As per verbal discussion held with the company representataive till date , the company will pay him per kilometer rate on the route specified to him for lifting the employees from different point from the route specified . The company will pay him on kilometer running by his bus after deducting the not attendance charges if any . My querry is whether this type of service will attract service tax ? if yes then Whether Full Rate of Service Tax i.e. 10.00 % + edu  + shec  ? or Whether he can get abatement under 1 /2006 @ 60 % ?

Please clarify the above and i will be thankful to all members for giving me the clarification and highly oblidged .

Thanking you ,

Regards,

BAL KRISHAN GARG

[Snehal Kulkarni]

 

The service so received is catagorised as " Rent-a-Cab Scheme Operatior"

The service tax is payable on 40% of the gross amount charged by the operator for providing taxable service. The exemption is availed only if

 

a. Rent-a-cab operator does not avail Cenvat of Duty / tax paid on Inputs, input services and capital goods and

b. He does not avail benefit of notification No 12/2003-ST dated 20.06.2003-Notification NO 1/2006-ST dated 01.03.2006

 

As per earlier Notification no 9/2004-ST dated 09.07.2004, the service provider could availe Cenvat of Input services. This notification has been rescinded w.e.f 01.03.2006 and now can not avail any Cenvat Credit at all, if he avails aforesaid abatment.

 

AI Summary

Rent-a-cab service tax treatment requires limited taxable value when operator forgoes CENVAT to claim abatement. Transport of employees by a proprietory travel agency is categorised as a Rent-a-Cab Scheme Operator service; service tax is payable on a portion of gross receipts and an abatement for the remainder is available only if the operator forgoes CENVAT credit on inputs, input services and capital goods and does not claim the alternative notification benefit, in light of a rescission of earlier credit permission.