Reg notofication 15/2012

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Amit (Querist)

10 April 2012 As per notification 15/2012, service tax on hiring of motor is to be paid by both ie. service provider & service receiver as well. There is some percentage mentioned in the said notification. Also it is applicable where service receiver is a company and service provider is Individual/HUF/Firm. My queries are as follows
1. If my company takes service of hiring of motor car from individual who is not liable to service tax i.e his gross revenue is less than 9/10 lacs pa. then is only service receiver is liable to pay the service tax at the given percentage or he is not liable to pay service tax since service provider is not liable?
2. If my company takes service of hiring of motor car from individual who is registered under service tax and if he charges 12.36% service tax in the bill. Then how much should I pay him because as per notification service tax payable by service provider is limited to some percentage so he can not charge me entire service tax.
I hope i am clear with my queries. Please reply.

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) (Expert)

10 April 2012 1. you will be liable to pay your share.

2.He will Disclose full amount on Invoice for credit point of view it is required. You need to pay a certain percentage as mentioned in notification to the service provider.

Amit

Amit (Querist)

11 April 2012 Dear Sir, Thanks for your reply. Are there any other views???

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

20 July 2025 Yes, your queries are very relevant in the context of Notification No. 15/2012–ST dated 17.03.2012 (under Reverse Charge Mechanism). Let’s address both your queries in detail:

✅ Context of Notification 15/2012 – ST

Under this notification, reverse charge is applicable for certain services, including hiring of motor vehicles (meant to carry passengers), if provided by:

Individual / HUF / Partnership Firm / AOP
to
A Body Corporate (Company)
Service tax is shared as:

Service Provider (SP): 40% of ST liability
Service Receiver (SR): 60% of ST liability
(based on taxable value under Abatement Notification 26/2012-ST)
🔍 Query 1:

If my company takes service of hiring of motor car from an individual who is not liable to service tax (i.e., turnover less than ₹10 lakh), is my company (service receiver) still liable to pay service tax?
✅ Answer:
Yes, your company is still liable to pay its portion (i.e., 60%) of service tax under reverse charge, even if the service provider is exempt under threshold limit.

📌 Why?
Exemption from service tax due to threshold (under Notification 33/2012-ST) applies only to the service provider.
Reverse charge liability of the service receiver is independent of the provider’s status.
👉 Therefore, you must pay 60% of applicable service tax on the amount paid for hiring.

🔍 Query 2:

If my company takes the service from an individual who is registered under service tax and he charges 12.36% in his invoice, how much should we pay him?
✅ Answer:
You should not pay the full 12.36% to the service provider.

As per Notification No. 30/2012-ST read with Notification No. 15/2012-ST:

Service Provider is liable for 40% of total service tax
Service Receiver (your company) is liable for 60%
🧮 Example Calculation:
Suppose invoice amount (value of service) = ₹100,000
Applicable ST @ 12.36% = ₹12,360

Then:

SP can charge only ₹4,944 (i.e., 40%)
Your company must deposit ₹7,416 (i.e., 60%) directly to the government under reverse charge.
👉 You should inform the service provider not to charge the full ST, but only the portion he is liable for.

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