Service ta Liability on hiring mtor(Non AC) Vehicle, Service Tax

[Srivatsan Krishnamachari]

Dear Learned Friends,

A Body Corporate hires the service of a transport Operator(Individual) who has license to run his vehicle from RTA as a contract carriage, for transporting the employees of the said Body Corporate from a particular point to its place of work(factory) where no public transport facility is available. Should the Body Corporate pay service tax under reverse charge mechanism on 40% value of the Bill raised by the Individual Transporter who runs the contract carriage service.Are not Contract Carriers exempted from the definition of "Rent a Cab or Motor vehicle.

Kindly clarify.

Thanks and With Regards,

K.Srivatsan

Posts / Replies

[Radha Arun]

Non-AC contract carriages are exempted under entry 23(b) of notification 25/2012-ST; however the exemption specifically excludes "charter or hire". Therefore the terms of the contract with the transport operator are vital to the issue.