Consulting Company

This query is : Resolved

G Krishnan (Querist)
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21 May 2009 In the case of a consulting company which has purchased research services on behalf of its customer-The invoice from the research firm to the consulting company is INR One Lac plus service tax @10.3% = 10,300 - total- 1,10,300.00. The consulting company does not intend to add any value to this and will add no markup or margin. What should they
invoice the customer? Do they have to pay service tax again on total amount of 1,10,300?

Jitender

Jitender (Expert)
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21 May 2009 if they are working as an pure agent then they need not to charge servive tax again.

G Krishnan

G Krishnan (Querist)
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21 May 2009 Thank you, I would also like to know what is the definition of a pure agent.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 May 2009 Meaning of pure agent:-

Explanation1.–For the purposes of sub- rule (2), “pure agent” means a person who–

(a) 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;

(b) 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;

(c) does not use such goods or services so procured; and

(d) receives only the actual amount incurred to procure such goods or services.
Ref:- Service Tax (Determination of Value)Rules,2006.