Category - Liability of service tax

[Vijay Chitte]

'A' contract with 'B' that, 'B' is providing a service in the fields of arrangement of traveling facility to 'A'. For that 'B' availed services from 'C' (Other travel agency) for hiring a Car/Motor car for providing service to 'A'. Now 'C' raise the bill to 'B' Rs.10490/- in the following manner. Amount Rs.10490/- [10000 + 490 (4.9% Service tax) =10490] B' paid this amount to 'C'. And last, B raise this bill to A including of his margin of Rs.1000/- in the following manner. Gross Amount Rs.11000/- (10000+1000) + Rs. 1346/- (12.24% Service tax) = Rs.12346/- My query is: As per above activity is laible to service tax for “B” ? If yes, under which category of service?

[Guest]

Your query itself is clear and I do not see any confusion. Taxable Category of the service is the same for "B" and "C" and both are liable to pay service tax. If they do not avail the exemption, the benefit of CENVAT credit would be available.

AI Summary

Service tax liability applies to both the primary provider and the subcontracted car hire supplier, with CENVAT credit available if no exemption. B engaged C to hire a motor car to provide travel-arrangement services to A; C charged service tax to B, and B charged A including B's margin and service tax. Both B and C fall under the same taxable category and are liable to service tax; if no exemption is claimed, CENVAT credit may be available subject to credit conditions.