Rent cab service tax on vendor to vendor services

abatements 4420 views 4 replies

Meribooking Travels

Manager

24 Points Joined July 2014

Dear Sir,

Just want 1 clarification. We are a parternship (LLP) firm engaged into car rental business as an aggregator. We take cabs from various vendors and provide the services to corporates. We are registered under service tax.

Problem:

My vendors charges me service tax @ 4.944% on total bill amount. I provide services under RCM to corporates and corporates pay on behalf of me. I am not able to set-off or claim service paid to vendors.

Question

1. Is it correct to pay service tax to my vendors ? [B2B under rent cab to rent cab]

2. How sud I claim back for paid service tax, as in this scenario, we are paying it twice to government.

3. To overcome such scenario of double taxation, what is the way out.

4. If I provide services to a Pvt Ltd company engaged into cab rental (same services), then how sud I charge service tax to them, at what rate and can I recover tax from them.

Suggestion required:

If we convert our LLP into Pvt Ltd, then also sud we require to pay service tax to my vendors ?

Please provide your guidence on the same.

Ganesh.

Replies (4)

Harendra Kumar

Tax Advisor

1326 Points Joined July 2011

Yes, Service tax charged by your vendor in the partial form because 100% liability to your but they charged only partial a clause is applicable only 40% @ 4.944 of 12.36%.

Further you are registered with Service Tax and not charges service tax benefit availed SSI exemption 10 lakh and which tax charged on you same collected by your client i.e. corporate body.

Now you and your vendor are engaged same business then your vendor charged the fully tax @ 12.36% and same you availed as Cenvat Credit.

Plz read very carefully Service Tax Notification No. 30/2012 w.e.f. 01.07.2012 on cbec.gov.in

If other queries will be found then forward the same.

Kaushik

General Manager

78 Points Joined December 2012

The questions are the same as arise in my mind but sorry sir didnt get the answer in mind. If you can please tell us in simple language.. thanks

CA Vivek Goyal

Practising CA

148 Points Joined July 2011

Dear Ganesh & Kaushik,

Firstly the thing is that if you are receiving any rent a cab service from vendors then you are not liable to pay service tax under RCM. Person providing services to you will be liable to pay Service Tax @ 4.944%. Secondlly You are providing services to Companies then you should charge ST @ 4.944% from companies and they will pay remaining ST through RCM(Reverse Charge). W.e.f. 01st Oct'2014 you can take Cenvat Credit of Service Tax paid to your vendor and take benefit of CCR against Service Tax Liability.

Harendra Kumar

Tax Advisor

1326 Points Joined July 2011

As per Notification 20/2012 dt. 20.06.2012 as amended by N.F. 45/2012 dt. 07.08.2012.

Particulars

Service provider percentage of Ser-Tax

Service receiver percentage of Ser-Tax

a) In respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business.

NIL

100%

b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business.

60%

40%

In any condition receiver liability has to pay service tax only 40%.

e.g. Service value Rs. 100 – 60% ( on abate value ) = 40% of 12.36%=4.944%

in case b ) same liability have to pay @ 4.944%

But you are engaged in similar business then above mentioned condition are not applicable you.

Further you recd. such services by the Cab provider then you have to pay such duty and got the CENVAT benefit. If you are having SSI unit i.e. your turnover not exceeding Rs. 10 Lakhs then you have to pay such duty i.e. @ 4.944%.

If you are not SSI and having the exceed income Rs. 10 Lakhs then you charged the whole amount of duty after abatement claim.

Firstly there is no double taxation such services on partial basis one of the services provider and another is services receiver.

If you not got then again forward the same, but mentioned only point-wise reply.