Applicability of service tax on reimbursement

This query is : Resolved

Prashant (Querist)
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17 March 2011 Dear All
We have service tax registration under- Business Auxiliary services, Online Information Data, Information Technology Software Services & we are Indian Company.
We took consultancy services from India & we paid the bill alongwith service tax. later on we took credit also. Now we are recovering these consultancy charges (Net of service tax) from company situated in US which is a group company. The logic is that consultancy services were acquired for them.
In such situation, my query is do we need to pay service tax on that or do we need to charge service tax to the US based group company?

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)
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17 March 2011 If you received consultancy service for your US associate, prima facie the cenvat credit is inadmissible as it is not an input service of your business. You can develop an argument that you are providing the output service to the US part which is export of service and the service received from Indian company is an input service.

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