St on transportation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2013 One of our transportation vendor (unregister vendor) has given invoice excluding ST of Rs.10000/- (Passenger Bus hire charges ) , what is our ST liability .
do we need to pay full 12.36% to department or share of the ST under RCM.
If we should pay under which head ? kindly suggest me .

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2013 One of our transportation vendor (unregister vendor) has given invoice excluding ST of Rs.10000/- (Passenger Bus hire charges ) , what is our ST liability . do we need to pay full 12.36% to department or share of the ST under RCM. If we should pay under which head ? kindly suggest me .

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 This is a classic case under the **Service Tax Reverse Charge Mechanism (RCM)** in effect **as of 25 September 2013**, related to **passenger transport services** (e.g. hiring of buses).

Let’s break this down to give you a **clear, compliant answer**:

---

## ✅ Situation Summary:

* You **hired a passenger bus** from a **vendor who is unregistered under Service Tax**
* Invoice amount: ₹10,000 (excluding ST)
* **No Service Tax charged** by vendor
* You are asking:

* Is **Service Tax applicable?**
* If yes, do **you pay 100% or partial under RCM?**
* Under **which accounting/service code** to pay?

---

## 📘 Step 1: Is Service Tax applicable?

Depends on **type of passenger transport**:

| Scenario | Service Tax Status (2013) |
| ------------------------------------------------------------------------ | ---------------------------------------------- |
| **Contract carriage** (e.g. bus rented with driver for specific trip) | ✅ **Taxable** |
| **Stage carriage** (public bus transport with tickets issued per person) | ❌ **Exempt** |
| **Employee transportation (staff bus)** by employer | ✅ **Taxable** under "Renting of Motor Vehicle" |

From your message, it sounds like it's a **contracted bus hire** — so it **is taxable**.

---

## 📘 Step 2: Who pays Service Tax?

As per **Notification No. 30/2012-ST** (as amended), for the service of **renting of motor vehicle (designed to carry passengers)**:

| Type of Service Provider | Reverse Charge Split |
| ---------------------------------------------------- | ----------------------------------------------------------- |
| **Individual / HUF / Proprietor / Partnership firm** | 60% by **receiver**, 40% by **provider** |
| If **provider is unregistered** (as in your case) | Provider cannot pay — **you (receiver) pay 100% under RCM** |

---

## ✅ Final Answer:

> Yes, you must pay **100% Service Tax** on ₹10,000 under **Reverse Charge**, since:
>
> * Service is taxable (bus hire for passenger transport)
> * Vendor is **unregistered**
> * You are the **liable service recipient** under RCM

### 🧮 Tax Calculation:

| Base Value | ₹10,000 |
| --------------------------- | ---------------- |
| Service Tax @12.36% | ₹1,236 |
| **Payable by you to Govt.** | ₹1,236 under RCM |

---

## 📤 Accounting & Payment Head:

* **Service Tax Code / Category**: **"Renting of Motor Vehicle designed to carry passengers"**
* **Accounting Code for ST** (2013):

| Description | Code |
| -------------- | -------- |
| Tax | 00441089 |
| Education Cess | 00440298 |
| SHE Cess | 00440426 |

Use these when paying via **GAR-7 / online payment portal**.

---

## ✅ CENVAT Credit:

* You **can take credit** of this ₹1,236 paid under RCM **only if**:

* You use the vehicle **for providing output taxable services** (e.g. travel, staff movement in taxable business)
* And **not for personal use or exempt activities**

---

## 📝 Summary:

| Question | Answer |
| --------------------- | ------------------------------------------------------- |
| Is ST payable? | ✅ Yes |
| Who pays it? | ✅ You (100%) under RCM |
| Rate? | ✅ 12.36% on ₹10,000 = ₹1,236 |
| Under which category? | "Renting of motor vehicle designed to carry passengers" |
| Can you take credit? | ✅ Yes, if used for taxable business services |

---

Let me know if you'd like a sample **RCM entry in books** or **payment challan format**.

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