Segregation of reimbursement and service charge in invoice.

This query is : Open

Tapan Kumar Parui (Querist)
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10 June 2013 We are in FMCG sector.To promote our product we recruit many agencies & these employs girls & boys who promote our product to consumers. The agencies charges to us 15% over the salary they paid to these boys & girls & on the total value they charged 12.36% service tax.
Here my query is it possible if the invoice can be segregated in two part viz reimbursement of salary & 15% service charge. That means agency will charge service tax only on the service charge portion i.e. 15 of salary.
Kindly advice

Arvind Tiwari

Arvind Tiwari (Expert)
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11 June 2013 Dear Sir,

This type of Segregation of Taxablle Value will not hold good in law due to valuation Rules 2006 & various tribunal decisions.

Invoicing by your agencies is seems to be correct.

Arvind
9322368699

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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11 June 2013 We need to understand whether the services provided could be provided withoutthe boys/ girls. It appears not, therefore these are used to provide the taxable services and the same would be liable. Not possible to segregate as ST on gross amount charged for the service. Artificial break ups not possible.

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Tapan Kumar Parui

Tapan Kumar Parui (Querist)
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14 June 2013 Thanks both of you for your advice.