Service tax on reimbursement of expenses
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
23 August 2013
Dear all,
One of our client is providing Catering Services to a party and raising bill for it.
Apart from it, the party has agreed to pay a fixed sum of Rs. 20,000/- per month on raising of bill towards Fuel and Gas Charges, irrespective of Actual Expenditure. The party insist on paying Service Tax on this additional bill.
My Query is whether Service Tax to be charged on such additional bill of Rs. 20,000 per month?
If Yes, then at what rate it is to be charged?
Pl. reply ASAP.
Thanks in Advance
One of our client is providing Catering Services to a party and raising bill for it.
Apart from it, the party has agreed to pay a fixed sum of Rs. 20,000/- per month on raising of bill towards Fuel and Gas Charges, irrespective of Actual Expenditure. The party insist on paying Service Tax on this additional bill.
My Query is whether Service Tax to be charged on such additional bill of Rs. 20,000 per month?
If Yes, then at what rate it is to be charged?
Pl. reply ASAP.
Thanks in Advance
23 August 2013
Service tax is not chargeable on reimbursemnt of exp.
23 August 2013
1)in my opinion service tax is applicable and stand taken by your service provider is correct
2)however i do agree that No service tax on re-imbursement expences if payment of re-imbursement is on basis of actual expenditure and if he provided original bills paid by him
So service tax is applicable in your case
Please note service tax is not applicable only if re-imbursement of expences to pure agent only
2)however i do agree that No service tax on re-imbursement expences if payment of re-imbursement is on basis of actual expenditure and if he provided original bills paid by him
So service tax is applicable in your case
Please note service tax is not applicable only if re-imbursement of expences to pure agent only
23 August 2013
reimbursement of exp means whereby exp were earlier paid on behalf of other and no service is provided hence for reimbursement of exp whether for agent or any body is never taxable.
23 August 2013
Can you provide any refernce notification or any section reference where it is held that
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Fixed amount paid as re-imbursments is not liable to service tax,,,you may get cases only where service tax not applicable if re-imbursement is made as pure agent
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if it is allowed as you said it is best way to escape service tax
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Hence in my opinion only re-imbursment expences which is paid to pure agent or on providing original bills paid by him is not liable to service tax and rest will liable to pay service tax
citation: Delhi high court judgement in intercontinental consultants and technocrats pvt ltd it is held that only out of pocket expences was not liable to service tax
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Fixed amount paid as re-imbursments is not liable to service tax,,,you may get cases only where service tax not applicable if re-imbursement is made as pure agent
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if it is allowed as you said it is best way to escape service tax
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Hence in my opinion only re-imbursment expences which is paid to pure agent or on providing original bills paid by him is not liable to service tax and rest will liable to pay service tax
citation: Delhi high court judgement in intercontinental consultants and technocrats pvt ltd it is held that only out of pocket expences was not liable to service tax
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23 August 2013
then what is the diffrence between reimbursement or exp and out of pocket exp.
both means exp paid by us on behalf of others.
both means exp paid by us on behalf of others.
23 August 2013
1)re-imbursement of out of pocket expences means..amount paid as re-imbursement on actual bills paid by party and on production of original bills paid by him
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where as in the instant case here they are paying fixed sum to party
kindly provide any reference case law or section reference in support your words
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where as in the instant case here they are paying fixed sum to party
kindly provide any reference case law or section reference in support your words
23 August 2013
In general by logic what is the diff between out of pocket exp and reimbursement of exp?
23 August 2013
To say frankly as said by above author amount paid was not in the nature of re-imbursement expences,,
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A fixed sum was paying to party irrespective of original expences...how can we say it is re-imbursement expences
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And i cannot give logical difference between out of pocket expences and re-imbursmenet expences than what i have provided above
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i have provided a case law where only expences which is paid as a pureagent/on actual expences no service tax applicable
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please provide any case law where it is held that irrespective of actual expenditure any expenditure paid also not liable to service tax...
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however i recommend author to obtain a professional opinion from a chartered accountant (if he is not able to satisfy with my replies and case law provided,,)to get clarity and confirm opinion in this regard...so that he can avoid any letigation with department there after
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A fixed sum was paying to party irrespective of original expences...how can we say it is re-imbursement expences
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And i cannot give logical difference between out of pocket expences and re-imbursmenet expences than what i have provided above
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i have provided a case law where only expences which is paid as a pureagent/on actual expences no service tax applicable
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please provide any case law where it is held that irrespective of actual expenditure any expenditure paid also not liable to service tax...
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however i recommend author to obtain a professional opinion from a chartered accountant (if he is not able to satisfy with my replies and case law provided,,)to get clarity and confirm opinion in this regard...so that he can avoid any letigation with department there after
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 August 2013
Thanks for your opinion Mr. Tushar & Mr. Ganeshbabu.
One thing I need to clarify is that the bill for original services is issued as usual with Service Tax.
The other bill is for Filling of Gas for which the party only pays 20,000.00 per month, irrespective of our actual expenditure.
Now is your Answer is same that this is not reimbursement of expenses?
One thing I need to clarify is that the bill for original services is issued as usual with Service Tax.
The other bill is for Filling of Gas for which the party only pays 20,000.00 per month, irrespective of our actual expenditure.
Now is your Answer is same that this is not reimbursement of expenses?
24 August 2013
Yes,, it is ,,it is not reimbursement expences
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filling of gas is directly related to his out put service also here,,so it should form part of gross amount charged for his out put service,,
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More in the instance case expence incurred was not as a pure agent
And hence service tax applicable
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filling of gas is directly related to his out put service also here,,so it should form part of gross amount charged for his out put service,,
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More in the instance case expence incurred was not as a pure agent
And hence service tax applicable
24 August 2013
The gas charges etc. mentioned by you is service/activity naturally bundled with catering service and therefore service tax is leviable
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24 August 2013
About the reimbursement of the cost or expenditures incurred by the service provider they are not taxable or not to be included in value of service only when they were incurred by the service provider as a pure agent of the service receiver
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
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