Service Tax on Reverse Mechanism, Service Tax

[MALAYANUR PADMANABHARAO]

We employ APSRTC buses on hire on per km basis for transportation of employees from the defined locations to our factory and from factory to the defined locations for bringing workers to and fro the factory. The corporation is not charging any service tax on the services provided to us.

We have not paid any amount of service tax on reverse mechanism under the presumption that the Corporation is a body corporate and hence Reverse Mechanism is not applicable. Is our company liable for any service tax payment.

Posts / Replies

[BHIMIREDDY NAGARAMI REDDY]

In my opinion you are not liable to Service tax payment under reverse charge mechanism in terms of point (v) of Notification No. 30/2012-ST as the renting motor vehicle is not made by an individual or,HUF or partnership firm, but by RTC. Liability is on RTC who collects tax from you and pays the tax to the Government.

The relevant portion of the Notification is as under:

(v) 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 or supply of manpower for any purpose or service portion in execution of works contract 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;