Applicability of reverse charge mechanism

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2014 If a Company hires a motor Vehicle for carrying goods from one place to another, is reverse charge mechanism applicable?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 September 2014 No. Reverse Charge not applicable since it is not for carrying passengers.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2014 Thanks Sir for your above reply.
I have one more Query that in the above case,is service tax applicable on service provider?
Secondly if the tender documents say that above vehicle will be used for carrying employees and material both(though it is a transport vehicle)and work order does not say anything about carrying employees and practically employees are also carried in the transport vehicle(though illegal). is reverse charge still not applicable?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 September 2014 In the given situation Reverse Charge will be applicable. If you hire a Motor car designed to carry passengers then Reverse charge will be applicable whether you carry goods or anything else.

If you hire a motor car not designed to carry passenger (Like Truck) then reverse charge will be applicable " services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road.

For details check out below link--

http://www.simpletaxindia.net/2013/12/reverse-charge-mechanism-under-service.html

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