Service tax charged on reimbursement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2013 Hello,

I am working with a pvt. company. My company has rent agreement for guesthouse building. The electricity charges will be pay by the vendor & he will reimburse it from company. So, now the vendor has raised the invoice with supporting & charged service tax on electricity bill amount.

Please give the opinion on that, It is allowable or not ?

Ganeshbabu K

Ganeshbabu K (Expert)
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08 June 2013 If he charged service tax on re-imbursement of expences pay the service tax and take credit on servicetax paid

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2013 Ok, But the guesthouse is related to employee so we can not take credit of the service tax paid.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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08 June 2013 Reimbursement on actual basis will not apply service tax

Reimbursement Of Expenses Not Subject To Levy Of Service Tax. Ref:Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India and Anr., W.P. (C) 6730/2008

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Ganeshbabu K

Ganeshbabu K (Expert)
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08 June 2013 It is vexed issue..

Ask him to provide bill for re-imbursemnet of expences with out servicetax on basing judgement given in intercontinental consultants and technocrats pvt.ltd case

he may provide you bill inclusive of service tax basing service tax rule 5(1) but in above said case it is held that,

1) rule 5(1) was ultravires section 66 and 67 of finance act 1994,

2)it is held that cost incurred by service provider cannot be part of gross amount charged for service provided..

Please refer below link for detailed answer,

https://www.caclubindia.com/experts/service-tax-on-reimbursement-of-expenses-1310799.asp