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Service Tax on hiring of truck in plant primeses

Question BankCategory: Income TaxService Tax on hiring of truck in plant primeses
Shiv Shankar asked 8 years ago

Sir, Our company has hired a mini truck for shifting of material from one place to another within our plant premises. We paid a rent of Rs.3000/- per day with a average running of 30km per day.
Service provider was liable to provide truck along with a driver. If any day truck doesn’t run even a single km then also we are liable to pay daily rent of Rs.3000/-.
So, my question is under which head this service is taxable. whether service receiver is liable to pay any reverse charge on this or not.
Service receiver is not claiming any because he is not registered under S.Tax.

3 Answers
Jupiter Staff answered 8 years ago

Dear Shiv Shankar,
After introduction of new provision of Service Tax reverse Charge and Negative List (w.e.f. 01-07-2012), Now it is not necessary for a service to be covered under any taxable service category to become taxable. Now if a service is not covered in Negative List or Exemption notifications then it is taxable. To remove doubt a list of Declared services is also given through Various notifications issued on 20th June 2012 to implement of scheme as given in Finance Act 2012. Before Negative list introduction there were only two renting service under taxable services list, these were:

  1. Rent-a-cab
  2. Renting of Immovable Property

But your case was not covered under any of these category.

But as now after 1st July 2012, your case is not covered in

  1. Negative List
  2. Exemption list

Hence in your case the service is Taxable now. The same is also given under Declared Services as given in answer of Sh. Ajay Maan. Hence this is a Taxable Service.
Secondly your question is about Reverse charge. Service is your case does not fall under reverse charge and Service receiver need not pay anything under RCM. If we check services relating to vehicle renting which fall under RCM then there are only two service:

  1. GTA
  2. Renting a vehicle to carry passenger

And your case does not fall in any of the above neither it is a GTA nor the vehicle is to carry passenger. Hence this case does not fall under RCM.
Third, You state the fact that party is not claiming any service tax as he is not registered under ST:

  1. If party is not registered due to being turnover less than Rs. 9 lac then it is ok. And you need not pay any service tax to party.
  2. If turnover of party is over Rs. 9 Lac and party is avoiding Service tax then you need to ask the party to take registration and provide invoice as per service tax rules. Then you have to pay bill value plus service tax to party. If you do not ask party to provide proper invoice and you make a payment for service only (excluding service tax because it is not claimed by party) then also party is liable to pay service tax. Service tax department may send a demand notice for payment of service tax and getting service tax registration to party. But there is no fault at your end.

I think you get your query solved. Thanks for asking a question at FinacialFunda.

Amzad Pasha answered 3 years ago

Dear Sir,
I have given 4 trucks to a partnership firm on hiring basis and we have received an amount of Rs. 20 lakhs as hire charges in the FY 2015-16. whether Service Tax applicable for this.

Rahish answered 3 years ago

Truck given on hire is a taxable service after introduction of negative list w.e.f 1-7-2012, and your turvover is also above the minimum limit of 9 lakh. Hence this service was taxable and you were liable to pay service tax for the FY 2015-16.

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