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st on reimbursement

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This query is : Resolved

bipin.m.patel

bipin.m.patel (Querist)

24 November 2008 As per ST rule ,any expenses incurred by provider for rendering services are liable to st but any expenses incurred by provider on behalf on recipient are not liable to st.Suppose in a case it is specifically written in agreement that conveyance exp are to be reimbursed at actuals to provider by recipient then in that case whether provider is liable to charge st on reimbursment of conveyance exp paid by him?
will this expenses comes under purview of exp. for providing services OR under purview of on behalf of recipient.
Pls clarify my both questions.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

24 November 2008 Expenditure incurred by service provider on behalf of the service recipient and reimbursed to the provider can be deducted from the value of taxable services(including the said exps.)only if the service provider is acting as a pure agent of the service recipient. Other wise gross amount(including reimbursed amount) is liable for ST. Pl refer explanation(1) to rule 5(2) and CBEC circular F.N0.B1/4/2006-TRU

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