25 March 2013
I have a doubt regarding service tax and w.r.t to renting of motor vehicle
X pvt. ltd. is engaged in the business of leasing motor vehicles (cars basically). The lease agreements are primarily in the nature of operating lease. However X pvt ltd contends that since the vehicles are being given on lease, the same are not taxable under the "rent a cab" profile defined by service tax and hence no service tax is payable. Is the contention of X pvt ltd correct? If it is correct, then does such lease of moveable property become taxable under any other provision???
12 September 2013
X Pvt. Ltd has parted with the right of possession and effective control in favour of the user because the user will having unchecked – unhindered possession of the Vehicle. So the above transaction would NOT be liable to service tax.
The transaction involves transfer of right to use , the possession and effective control over such vehicle has been transferred with permission to use the vehicle. The user is free to use in any manner as he likes.
CAclubindia
