Service Tax on Rent-a-Cab

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parag (Querist)
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26 June 2010 Dear Expert

Our company has hired vehicles from various CAB Operators. One of the CAB operator is claiming service tax on 100% bill amout rather than 40% i.e. claiming 10.30% service tax on 100% bill amount rather than 40% bill amount. I have asked him about this and he is replying that we are awailing 100% CANVAT Credit hence we are claiming service tax on 100% bill amount. So I request you to please explain me. If any service provider availaing 100% CANVAT Credit of Service tax then he can not get the benifit of ABETMENT? Please explain. I will be very thankful to you.

Rasesh

Rasesh (Expert)
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26 June 2010 In my view the cab operator is correct. This is the general industry practice.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 June 2010 Yes. Cab operator is correct. becasue if service provider opted for abatement he cannot claim CENVAT , if he not opted for abatement he can charge full ST and claim CENVAT also

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