Service Tax Doubt

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Devendra (Querist)
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29 August 2010 Mr. X hires trucks from party Mr. Y and uses them towards goods transport for party Mr. Z, and charges Mr. Z for this. Mr X pays Y the hire charges charged by Mr. Y.Now if Mr. X's receipts go above 1000000/- will it be mandatory for him (Mr. X) to apply for a service tax number? Does such kind of service come under the Service Tax? If yes under which service?

avdhesh varshney

avdhesh varshney (Expert)
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29 August 2010 1. U/s 69, Any person liable to pay service tax must mandatorily make an application (in form ST-1) for the registration to the respective Superintendent of Central Excise.
now, i come to ur query,
receipt of Rs 10,00,000 is the sale value of the goods sold by Mr. X and not the service charges.
further he charges the paid service tax from its client, so it is required to take the registration as per rule 4 and section 69.

Dayal

Dayal (Expert)
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30 August 2010 Mr. X hires trucks from party Mr. Y and uses them towards goods transport for party Mr. Z, and charges Mr. Z for this. Mr X pays Y the hire charges charged by Mr. Y.Now if Mr. X's receipts go above 1000000/- will it be mandatory for him (Mr. X) to apply for a service tax number? Does such kind of service come under the Service Tax? If yes under which service?

Mr X is providing services of Transport of goods by Road

For all purposes Mr. X is not liable to charge service tax, neither seek registration under service tax.

The rule clearly implies that the recipient Mr. Z is liable to pay service tax on the Freight amount after considering 75% abatement.

Even if Mr. X’s Income crosses 10 lacs , he is still not liable to seek registration

However you have not clarified as to the arrangement between Mr X and Mr Y, is for lease of trucks , if yes whether the right to use clause is addressed in the agreement, else this could attract service tax, if right to use clause is addressed then VAT is applicable.

Do check this out

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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01 September 2010 Since the service is provided by a truck owner/ operator and not by the GTA there is no liability under ST

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