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SERVICE TAX ON SEPERATE INOVICE REAISED FOR REAL REIMBURSEMENT OF EXPENDITURE

Service Tax - Started By: - abbas mukhi - Dated:- 8-2-2016 Last Replied Date:- 10-2-2016 - SIR,WE ARE ON SOME OCCASIONS INCURRING EXPENDITURE ON BEHALF OF OUR CLIENT, LIKE BOOKING OF ROOMS IN HOTELS, BOOKING TAXI.AFTER THAT WE ARE CLAIMING ACTUAL EXPENDITURE INCURRED BY US WITHOUT ANY PROFIT WITH ELEMENT THROUGH SEPARATE INVOICE RAISED (WITH SUPPORTING OF ACTUAL EXPENDITURE)I WANT TO WHETHER SERVICE TAX IS APPLICABLE CONSIDERING THE RULES AND PROVISIONS OF THE SERVICE TAX ACT ON SUCH INVOICES.TH .....

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of 'Service' as per Section 65 B(44) of the Finance Act which is appended below:- (44)  service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29 .....

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stration 1.-X contracts with Y, a real estate agent to sell his house and thereupon Y gives an advertisement in television. Y billed X including charges for Television advertisement and paid service tax on the total consideration billed. In such a case, consideration for the service provided is what X pays to Y. Y does not act as an agent behalf of X when obtaining the television advertisement even if the cost of television advertisement is mentioned separately in the invoice issued by X. Advert .....

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service on his own account for providing the taxable service. Such expenses do not become reimbursable expenditure merely because they are indicated separately in the invoice issued by the service provider to the recipient of service. Illustration 3.- A contracts with B, an architect for building a house. During the course of providing the taxable service, B incurs expenses such as telephone charges, air travel tickets, hotel accommodation, etc., to enable him to effectively perform the provisio .....

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accommodation and any other incidental expenses such as parking fees by the Company X during the tour. At the end of the tour, the chauffeur returns the balance of the amount with a statement of his expenses and the relevant bills. Company X charges these amounts from the recipients of service. The cost incurred by the chauffeur and billed to the recipient of service constitutes part of gross amount charged for the provision of services by the company X. You can determine your liability for paym .....

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s a like Tide in the sea, never be stable to draw a conclusion. At last one has to take a stand in his mind to frame an answer to the problem. And stick to it by giving all the supporting favouring his/her reply. This is reason I guess the Tax persons are called Experts who sail in the Tide of law very strongly and with lots of efforts. Hence I give standing ovation to Experts who contribution to TMI by the casting their answer/opinion by digging their knowledge treasury to querist totally free .....

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ayable for such service . The reimbursable expenses are not charges for such service and hence are not includible in value. To get over that decision, it is provided that consideration shall include any reimbursable expenditure or cost incurred by the service provider and charged, in course of providing or agreeing to provide service, except in case of prescribed circumstances - proposed Explanation (a) to section 67 of Finance Act, 1994. It must be remembered that section 67(1)(i) of Finance Ac .....

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ding/unloading charges, port charges etc. paid by Customs Broker on behalf of customer and then recovered. These amounts recovered are not for taxable services . Any expenditure incurred by service provider on behalf of service receiver (for administrative convenience) and recovered from service receiver cannot be part of value of taxable service . Under negative list of services, there is no specific definition of any taxable service . Thus, scope of any taxable service is on basis of mutual ag .....

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on of Delhi High Court in the case of Intercontinental Consultants and Technocrats P Ltd. v. UOI = 2012 (12) TMI 150 - DELHI HIGH COURT. At present definition of consideration under Section 67 is - consideration includes- (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and sub .....

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d as correctly explained above.At present, any activity undertaken if it is not there in the negative list would become taxable. The next question arises that whether the activity of incurring such expenditure on behalf of the service receiver itself is considered as service?This question would give rise to two results: 1. Where in the Reimbursements have not been shown as a separate amount in Invoice or if the separate amount shown in the reimbursement is not the actual amount incurred then it .....

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incurred in behalf of Service recipient, then the service Tax may not be charged. Also refer to the following coloured lines cited in the definition of Consideration under section 67 :-(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;In view of above, in the present case, since only occasional expenses not r .....

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