21 February 2009
As the above query is solved the reply is as follows:- Expenditure incurred by service provider on behalf of the service recipient and reimbursed to the provider can be deducted from the value of taxable services(including the said exps.)only if the service provider is acting as a pure agent of the service recipient. Other wise gross amount(including reimbursed amount) is liable for ST. Pl refer explanation(1) to rule 5(2) and CBEC circular F.N0.B1/4/2006-TRU
Explain mening of pure agent and explain the above with help of example.....please
21 February 2009
“pure agent” means a person who– enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service;
neither intends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service;
does not use such goods or services so procured; and
receives only the actual amount incurred to procure such goods or services
For examples, visit http://www.ieport.com/service_tax/Service%20Tax%20-%20Determination%20of%20Value%20Rule%202006.htm
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