EXEMPTIONS TO TRANSPORT SECTOR IN SERVICE TAX

Share
Notification No. 25/2012-ST
dated 20.6.2012 provides exemptions to transport related services as discussed
in following paras:
HIRING OF TRANSPORT VEHICLES
Following services in
relation to hiring of transport of vehicles is exempt from levy of Service Tax
Services by way of giving on
hire –
(a) to a State transport
undertaking, a motor vehicle meant to carry more than twelve passengers; or
(b) to a goods transport
agency, a means of transportation of goods;
Exemption shall be available
subject to following two conditions –
(a) hiring to a State
transport undertaking or to a goods transport agency
(b) hiring of motor vehicle
to carry more than 12 passengers or in case of GTA, for transportation of
goods.
In both the cases, vehicle
should be given on hire.
“State transport
undertaking” has the meaning assigned to it in clause (42) of Section 2 of the
Motor Vehicles Act, 1988. According to Section 2(42) of the Motor Vehicles Act,
1988 State transport undertaking means any undertaking providing road transport
service, where such undertaking is carried on by


(i) the Central Government
or a State Government;
(ii) any Road Transport
Corporation established under section 3 of the Road Transport Corporations Act,
1950 (64 of 1950);
(iii) any municipality or
any corporation or company owned or controlled by the Central Government or one
or more State Governments, or by the Central Government and one or more State
Governments.
“Goods carriage” has the
meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act,
1988. According to section 2(14) of Motor Vehicles Act, 1988, Goods carriage
means any motor vehicle constructed or adapted for use solely for the carriage
of goods, or any motor vehicle not so constructed or adapted when used for the
carriage of goods;
Goods Transport agency has
been defined in section 65(B) to mean any person who provides service in
relation to transport of goods by road and issues consignment note.
TRANSPORT OF PASSENGERS
Following type of transport
of passengers shall be exempt from Service Tax –
Transport of passengers,
with or without accompanied belongings, by –
(a) air, embarking from or
terminating in an airport located in the state of Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra
located in West Bengal;
(b) a contract carriage for
the transportation of passengers, excluding tourism, conducted tour, charter or
hire; or
(c) ropeway, cable car or
aerial tramway;
Contact carriage is defined
in section 2(7) of the Motor Vehicles Act, 1988. Accordingly,
“Contract carriage means a
motor vehicle which carries a passenger or passengers for hire or reward and is
engaged under a contract, whether expressed or implied, for the use of such
vehicle as a whole for the carriage of passengers mentioned therein and entered
into by a person with a holder of a permit in relation to such vehicle or any
person authorized by him in this behalf on a fixed or an agreed rate or sum —
(a) on a time basis, whether
or not with reference to any route or distance; or
(b) from one point to another,
and in either case, without stopping to pick up or set down passengers not
included in the contract anywhere during the journey, and includes —
(i) a maxicab; and
(ii) a motor cab
notwithstanding that separate fares are charged for its passengers”.
The ingredients of a
contract carriage are as follows :-
v  It
carries passengers for hire or reward;
v  It
is engaged in contract whether expressed or implied for use of such vehicle as
a whole;
v  The
contract must be entered into by the person with the holder of permit in
relation to such vehicle or with any person authorized by him;
v  The
agreed consideration can either by on time basis or one point to another;
v  The
vehicle should not stop to pick up or set down passengers not included in the
contract anywhere during the journey;
v  It
includes maxi-cab or motor-cab.

In
cases where a bus operates on a route under a contract carriage and passengers
embark or disembark from the bus at any place falling on the route and pay
separate fares for the whole or for stages of journey, no Service Tax would be
payable. However, transport of passenger in a contract carriage for the
transportation of passengers for tourism, conducted tour, charter or hire is
taxable.
Original Source:  www.taxguru.in
RECOMMENDED READ  SEZ - (Circular) - Guidelines for Power Generation in SEZ dated 06.04.2015

Leave a Reply

Written by

Optimization WordPress Plugins & Solutions by W3 EDGE
%d bloggers like this: