Dear Mr. Dalia Felix,
We would like you to note the following –
1) Hiring of taxi cars for employers or otherwise in covered under reverse charge in Entry No. 7 of Notification No. 30/2012.
2) Hiring of contact carriage would have to satisfy the following definition as per section 2(7) of Motor Vehicle Act, 1988
Meaning of Contract Carriage
According to Section 2(7) of the Motor Vehicles Act, 1988, contract carriage is defined as under –
“Contract carriage means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorized by him in this
behalf on a fixed or an agreed rate or sum —
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes —
(i) a maxicab; and
(ii) a motor cab notwithstanding that separate fares are charged for its passengers”.
The ingredients of a contract carriage are as follows :—
- It carries passengers for hire or reward;
- It is engaged in contract whether expressed or implied for use of such vehicle as a whole;
- The contract must be entered into by the person with the holder of permit in relation to such vehicle or with any person authorized by him;
- The agreed consideration can either by on time basis or one point to another;
- The vehicle should not stop to pick up or set down passengers not included in the contract anywhere during the journey;
- It includes maxi-cab or motor-cab.
Therefore, our view is that vehicle transportation of employees by bus may be covered under definition of contact carriage.
3) Reverse charge is applicable to all motor vehicles as per Notification No. 30/2012.
4) Contract carriages are exempt under Notification No. 25/2012 [entry No. 23(b)] but this exemption excludes. Contract carriages used for tourism / conducted tour / charterer / hire.
The case of only renting makes the confusion clear.
Regards,
Sanjiv Agarwal