Services by way of renting of a motor vehicle, designed to carry passengers to any person who is not in the similar line of business, provided or agreed to be provided by any individual, HUF, partnership firm, whether registered or not, including AOP, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory are covered under Reverse Charge Mechanism.
Further, Notification No. 26/2012-ST dated 20-06-2012 provides for abatement of 60% of gross amount charged for determination of value of taxable service provided the service provider does not avail CENVAT Credit on input, capital goods and input services used for providing taxable service.
In terms of Notification No. 30/2012, the extent of service tax payable by the service recipient is (a) 100% in case abatement of 60% is claimed by the service provider(i.e. 100% of 4.944%) and (b) 40% in case no abatement is claimed by the service provider (i.e. 40% of 12.36% or 4.944%).
Thus, the liability on the service recipient to pay service tax under the head rent-a-cab service is always restricted to 40% of the gross value of service charged by the service provider.
Attached document contains a brief note on Reverse Charge on Renting of Motor Vehicles.
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