Service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 September 2014 There is a party A who provides motor vehicle on rent,with whom a party named B had contracted for the supply of motor vehicle. In this contract, a clause is mentioned as "the prices will be inclusive of all charges including taxes" party a raises a bill of amount Rs.2109 to party b party a is availing abatement so party b will calculate service tax as 2109*40%*12.36%=104.269 now my question is which option is correct for payment to party A-
option 1
paid to Party A 2109-104.269=2004.731 and party B deposit Rs. 104.269 as st to gov.

option 2
paid to party A 2109 and
party B deposit Rs. 104.269 as st to gov.from his own