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Comments
(Deepak Dalvi) Posted On: 10 Sep, 2014

Respected Sir, I have query related to Rent a Cab Service 1. we received a monthly bill from bus service provider for pick up & drop facility from company to station and he is charging 40% of 12.36% ST in the bill. is this correct? or we paid 40% Directly to Govt. under RCM. 2.how to show in the return as a service receiver or not to show in the return. a. if pay to service provider b. if pay to Govt. 3. what about 60% of service tax part. Thanx & regards Deepak

For rent a cab service, there is abatement notification which prescribes that only 40% of the taxable value is leviable to service tax provided no cenvat credit is taken. However, the provision of reverse charge mechanism is applicable if rent a cab service is provided by individual/HUF/partnership firm to business entity registered as body corporate. Further, in case the benefit of abatement notification is availed, the liability to pay service tax to the government is on service recipient under full reverse charge. However, if the benefit of notification is not availed by the service provider, then 50% liability is to be paid by service provider and 50% by the service recipient. Before budget 2014-15, it was 60% for service provider and 40% for service recipient. Now, assuming that you are a business entity registered as body corporate and you have received services of rent a cab from individual/HUF /partnership firm, the service tax liability will be 100% on you if the benefit of abatement is availed. Consequently, the practice of service provider charging 40% of 12.36% ST in the bill is wrong. The revenue department may raise service tax demand on your company as if the benefit of abatement is availed, service recipient is liable to pay 100% service tax. If the service tax is paid to the service provider, then it will not have mention in ST-3 return because the credit of service tax paid is not admissible in case of rent a cab service. Moreover, it will lead to double taxation as department will insist you to pay service tax under reverse charge. If you pay service tax under reverse charge mechanism, the same will be reflected in the ST-3 return filed by you in the capacity of service receiver. {Query replied by:- CA Neetu Sukhwani & Ranu Dhoot}
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PRADEEP JAIN, F.C.A.

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