Is hire purchase taxable service

as per my view, vat or cst is applicable.

service tax is not applicable. 

because hire purchase is only a mode of sale in installment.(i.e. not a part of service.)

There are certain activities which are declared as Services even though they may not be considered as services in normal course of business. One of such declared services under Sec 66E (g) is Any activity in relation to delivery of goods on hire purchase or any system of payment by instalments.

Accordingly The activity of hire purchase is not liable to service tax but the activities in relation to such arrangement would be liable. Ex: Processing fee, application fee etc

Mr Nagendra is correct, it is Deemed service u/s 66E(g), further I would like to include that hire purchase sale is Deemed sale under article 366(29A) of Constitution, therefore VAT is also levible and by virtue of 66E ST is also levible. Now in HP sale 3 components are involved processing fee by any other name,interest and installment. Now ST is on processing fee and interest upto extant of 10% by vertue of EN 26/2012 and VAT on principal and interest component as pr SC Judgement in Jai bharat.

Mr Nagendra is correct, it is Deemed service u/s 66E(g), further I would like to include that hire purchase sale is Deemed sale under article 366(29A) of Constitution, therefore VAT is also levible and by virtue of 66E ST is also levible. Now in HP sale 3 components are involved processing fee by any other name,interest and installment. Now ST is on processing fee and interest upto extant of 10% by vertue of EN 26/2012 and VAT on principal and interest component as pr SC Judgement in Jai bharat.

Along with above notting..In HP 90% abatement is also available if no CCR is taken by SP.

Agree with the above views. One addition is that interest element in the hire purchase will not be subjected to service tax and the balance portion. abatement @ 90% can be availed.

Regards,

Ravi Kumar Somani

Yes it shall be taxable

 as per sec 66G hire purchase shall be deemed to be sales anad sales shall be taxable and VAT and CST shall be applicable