Service of transportation of passengers - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 15 Service of transportation of passengers Effective date: 1.7.2012 Scope of Negative Service Section 66D (o) W.e.f. 1.7.2012 to 30.9.2014 Service of transportation of passengers, with or without accompanied belongings, by (i) a stage carriage; (ii) railways in a class other than (A) first class; or (B) an air conditioned coach; (iii) metro, monorail or tramway; (iv) inland waterways; (v) public transport in a vessel of less than fifteen tonne net, other than predominantly for tourism purpose; and W.e.f. 1.10.2014 to 31.5.2015 Service of transportation of passengers, with or without accompanied belongings, by (i) a stage carriage; (ii) railways in a class other than (A) first class; or (B) an air conditioned coach; (iii) metro, monorail or tramway; (iv) inland waterways; (v) public transport in a vessel of less than fifteen tonne net, other than predominantly for tourism purpose; and (vi) metered cabs or auto rickshaws; Note:- Amendment w.e.d. 1.6.2015:- The transportation of passengers by radio taxis is taxable service w.e.f. 1-10-2014.Thus the services which are generally known by different brand name like MERU, MEGA CAB etc. will become taxable service. W.e.f. 1.6.2016 Service of transportation of passengers, with or without accompanied belongings, by (i) [***] (ii) railways in a class other than (A) first class; or (B) an air conditioned coach; (iii) metro, monorail or tramway; (iv) inland waterways; (v) public transport in a vessel of less than fifteen tonne net, other than predominantly for tourism purpose; and (vi) metered cabs or auto rickshaws; Note:- Amendment w.e.d. 1.6.2016:- The Negative List entry that covers service of transportation of passengers, with or without accompanied belongings, by a stage carriage have been omitted [ section 66D (o)(i) ] with effect from 1.06.2016. - As a consequence, the above services become taxable with effect from 1.06.2016. However, such services by a non-air-conditioned contract carriage will continue to be exempted by way of exemption notification [ Notification No. 25/2012-ST , as amended by notification No. 09/2016-ST, dated 1st March, 2016 refers]. - The service of transportation of passengers by air-conditioned stage carriage is being taxed at the same level of abatement (60%) as applicable to the transportation of passengers by a contract carriage, with same conditions of non-availment of Cenvat credit. [ notification No. 08/2016-St dated 29th February, 2016 refers] Meanings and Definitions: Section 65B(29) - inland waterway means national waterways as defined in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985 (82 of 1985.) or other waterway on any inland water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917; (1 of 1917.) Section 65B(32) - metered cab means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 (59 of 1988) and the rules made thereunder; Section 65B(38) - port has the meaning assigned to it in clause (q) of section 2 of the Major Port Trusts Act, 1963 (38 of 1963) or in clause (4) of section 3 of the Indian Ports Act, 1908; (15 of 1908.) Section 65B(46) - stage carriage shall have the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988; (59 of 1988.) As per section 2(40) of Motor Vehicles Act, 1938, Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for whole journey or for stages of the journey. Above definition, exclude Taxis as normally, the taxis are capable of carrying only 4 passengers. Section 65B(53) - vessel has the meaning assigned to it in clause (z) of section 2 of the Major Port Trusts Act, 1963; (38 of 1963.) Clarification by the Board (Taxation Guide Guidance Note 4 Exemptions dated 20.06.2012) <!--[if !supportLineBreakNewLine]--> <!--[endif]--> 4.15.1 Are services by way of giving on hire of motor vehicles to state transport undertakings covered in this negative list entry? No. However such services provided by way of hire of motor vehicle meant to carry more than 12 passengers to a State transport undertaking is exempt. 4.15.2 In some cases contract carriages get permission or temporary permits to ply as stage carriages. Would such services be taxable? Specific exemption is available to services of transport passengers by a contract carriage for transportation of passengers, excluding tourism, conducted tours, charter or hire. (Refer entry No. 23 of Exhibit A3). 4.15.3 Are national waterways covered in the definition of inland waterways? Yes. 4.15.4 Would services by way of transportation of passengers on a vessel, from say Chennai to Port Blair (mainland - island) or Port Blair to Havelock (inter island), be covered in the negative list entry? Yes in case the transportation is not predominantly for tourism purpose as such transportation by a vessel (of any size) is between two places located in India. 4.15.5 What is the scope of the phrase 'predominantly for tourism purpose' which qualifies the negative list entry relating to public transportation of passengers by a vessel in sub-clause (v) of clause (o) of section 66D ? The words 'other than predominantly for tourism purpose' qualify the preceding words public transport . This implies that the public transport by a vessel should not be predominantly for tourism purposes. Normal public ships or other vessels that sail between places located in India would be covered in the negative list entry even if some of the passengers on board are using the service for tourism as predominantly such service is not for tourism purpose. However services provided by leisure or charter vessels or a cruise ship, predominant purpose of which is tourism, would not be covered in the negative list even if some of the passengers in such vessels are not tourists.