ST on engaging a State Corporation Bus on tourinsm purpose

[P S SATYA NARAYANA]

Dear Sir,

We are a Public Limited Company.  Recently we have engaged a State Road Transport Corporation Bus for our employees to go to Goa on a Tour.  Whether the above activity attracts Service Tax and we need to pay it under Reverse Charge

[CASeetharaman KC]

Dear Sir

The only transport by contract carriage which is covered in Mega Exemption Notification no 25/2012 dated 20-06-2012  is as follows :

" a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire"

The above activity would be subject to service tax but not under the reverse charge mechanism as the Notification No. 30/2012-ST dated 20-06-2012 provides that services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers to any person who is not in the similar line of business by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory would be subject to reverse charge under the notification.

In this case the service provider is not an individual, HUF, partnership firm or AOP therefore reverse charge mechanism will not apply. Service tax therefore needs to be paid by the service provider only.

[YAGAY andSUN]

Reverse Charge, will not be applicable in this scenario.  Service Provided will have to charge service tax and deposited it in Government's account.

AI Summary

Service Tax on tourism bus hire remains payable by the provider; reverse charge not attracted against a state corporation. Transport of passengers by contract carriage for tourism is taxable. Because the supplier is a State Road Transport Corporation and not an individual, HUF, partnership firm or association of persons, the Reverse Charge mechanism does not apply; the service provider must collect and remit the Service Tax.