Rule 5 (2) Pure Agent Basis

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j p nayak (Querist)
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21 July 2009 what is the proper explanation to Rule5(2) of Service Tax.

My company is into engineering consultancy. when we provide service to clients we have to arrange vehicles at the project sites as per the requirement of terms of agreement. client pays us against vehicles at a fixed amount per vehicle used per month. will it be a part of taxable service for calculating service tax or it should be excluded from taxable value of services as per Rule 5(2).

Please reply with proper explanation of the term 'pure agent' .

Thanks a ton.

Rajesh Kumar

Rajesh Kumar (Expert)
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27 July 2009 It has to be seen that whether it is GTA service or renting of movable property. If the payment to vehicle is on the basis of how much transportation has been done, it is GTA; if on fixed monthly basis, it is renting of immovable property.
If it is GTA, user is required to pay; if it is renting, service provider is to pay. In second case, the service provider shall have small scale exemption.
The defence of "pure agent" is irrelevant.

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