Service Tax on reimbursement of exp., Service Tax

[RAM SHARMA]

Dear Expert,

As a  Consignee Agent i am doing  sale of consignment goods on commission basis. Our income is  commision from sale. In spite of that we are reimburse transporation exp. and local handling/other charges from the company. would we include local handling and reimburesement exp in our gross income to assess the service tax liability.

Our income from commission is nine lacs and reimburse expenses is two lacs. Pl suggest.

Thanks

Posts / Replies

[megha agarwal]

Dear Mr. Sharma,

Section 67 of the Finance Act, 1994 authorizes the determination of the value of the taxable service for the purpose of charging service tax under Section 66/66B as the gross amount charged by the service provider for such service provided or to be provided by him, in a case where the consideration for the service is money. It is only the value of such service that can be brought to charge and nothing more. The quantification of the value of the service can therefore never exceed the gross amount charged by the service provider for the service provided by him.
Further, Rule 5(1) of the Rules, in as much as it provides that all expenditure or costs incurred by the service provider in the course of providing the taxable service shall be treated as consideration for the taxable service and shall be included in the value for the purpose of charging service tax goes beyond the mandate of Section 67 merits acceptance.
Moreover, it has been validly upheld by the Hon’ble Delhi High Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India & ANR (2012 (12) TMI 150 - DELHI HIGH COURT) that reimbursement of expenses shall not be liable to service tax. Hence, reimbursed expenses of Rs. two lakhs as above shall not be liable to service tax.

Regards,

Megha Agarwal