Service tax input credit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 Hi...i am working for a TMC (travel management company) We do hire cars from our service providers and extend their services to our clients. In the process our service provider charges us service tax on his bill (my purchase rate) and when i bill it to my client (my selling rates) i charge service tax to my clients.

To be more simple :

ST charged by service provider - Rs. 100/-
ST charged by TMC to client - Rs. 120/-

My query is:

I pay my vendor Rs. 100/- (the service tax charged by him) and then what is the amount i need to pay the government for the tax recovered from client.

Should i pay the difference amount (120-100) Rs. 20/- as tax as the balance 100/- i have already reimbursed by vendor with.

Please advice.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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16 December 2014 Since you are engaged in the business of rent-a-cab you can avail CENVAT credit of service tax paid on hire charges of cars.

You can utilize this service tax against your service tax liability

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Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 hi..thanks for your assist.

Since we dont have a rent a cab license under our company name and we work as an agent..i.e take cars from cab vendors and provide the same to our clients.

In such case can v take the credit and avoid double taxation.

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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16 December 2014 You can take CENVAT credit only if you are registered under service tax under the category rent-a-cab

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Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2014 what if we are not registered under rent a cab....do we need to charge double tax to our client

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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16 December 2014 If you are not registered under rent-a-cab then you CANNOT avail CENVAT credit of service tax paid on hire charges of cars.

Accordingly such service tax shall be added to your cost. It will result in double taxation.