Service tax

for service tax, "rent a cab" applies

for TDS 194C applies

Person liable to pay: Rent-a-cab operator.

Head of Account

The constitution validity of levy of service tax on rent-a-cab operator has been upheld in the case of Secretary, Federation of Bus Operators Association of Tamil Nadu v. UOI 2006 (2) STR 411 (Tri - Mad.). This was also approved b Tamil Nadu Tour Vehicles Owners & Operators Association 2003 (157) ELT A144 (SC)

“The High Court further held that if a person is plying Motor Cabs or Maxi Cabs and service are provided by him to any person in relation to renting of cabs, such service becomes ‘taxable service’ and comes within the ambit of Section 66(3) of Finance Act, 1994 and holding a licence under Rent-a-Cab Schemes, 1989 is not required for being leviable to Service Tax.

The High Court also held that tax on service is levied on a person if he is in the business of engaging tax is for his customers and giving them service even without owning or plying the vehicle and is not comparable to tax under Entry 56 list II of Schedule VII of Constitution of India where tax is levied only on person owning or plying a vehicle.

Pay Service Tax on the 40% of the gross amount charged after availing the 60% abatement under Notification No. 1/2006 – S.T In such case the service provider cannot avail CENVAT Credit.