Inclusive method and other implications

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CA.Madhavan (Querist)
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21 August 2009 1.A company met expenses for the it as well as for franchisess.
2 Later on The company collects the charges from the franchisees.
3.Service tax dept wanted that the tax should be paid.
4.We paid an amt under protest based on the inclusive method (Gross amt collected includes service tax)
5. we also argued that the ST applicability not comes as we are just an intermediary for collecting and paying the charge.no addtional profit from the transaction.
My doubt is wheteher we can have follow such a view

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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21 August 2009 Amount received = basic +ST is valid under law.

You should examine Rule 5 (2) for exception to the rule of inclduing the reimbursments as value of taxable services.
My view is that reimbursments per se cannotbe made liable but the same requires judicial confirmation to be followed.

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