VAT on Running of buses on hiring basis

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2010 Dear Friends,

Please give your advice on whether VAT is applicable on running of buses/mini-buses/cabs on contractual/hiring basis in schools and offices.

Please also give reference of the relevant provisions of rules/Act.

Thanks & Regards.

sachin alwadhi

sachin alwadhi (Expert)

14 April 2010 i think vat is not applicable .this should come under service tax provision.

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2010 Will it not be covered under right to use?

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

16 April 2010 Running of vehicle on hire is as such not a subject matter of VAT, but if the transaction covers the transferof right to use, such transaction will fall under the ambit of VAT.
Clause 29A of article 366 of the Constitutuion of India specifiocally includes
" transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration" in the ambit of sale and accordingly state govts are authorised to collect taxes on the said transactions.

Querist : Anonymous

Querist : Anonymous (Querist)

17 April 2010 Thanks Mr. Agarwalla,

In this case, the possession of the bus will remain with the driver of the bus but the control to use the bus shifts to the user of the bus, say school. Driver will run the bus in accordance to the schedule and route provided by the school. Will it be considered as providing right to use the bus to the school and hence, covered under VAT.

Actually, in our case, bus operator has a contract with a school in Ghaziabad. Sales Tax official in Ghaziabad approached school and asked whether they are deducting WCT from the payments made to the bus operators.

WCT in any case should not be applicable, as per my understanding.

What is your opinion, Sir?

Regards
Atul.

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

17 April 2010 I think, in your case, the wordings of the contract will be most important. There are few case ;laws relating o similar case. You may kindly refer theose.

Querist : Anonymous

Querist : Anonymous (Querist)

18 April 2010 Thanks

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