Applicability of service tax on event managment services

Dear Professionals,

I request you all to reply me as soon as possible.

One of our client ABC PVT LTD is providing Event management service to XYZ LTD. All the hotel charges like food bill etc suppose Rs 100 including service tax are incurred by ABC PVT LTD which will be re-imbursed by XYZ LTD with 10% i.e. commission on hotel bill.

ABC PVT LTD is in practice to charge service tax on whole of rs 110 while XYZ is in view that service tax will be charged on commission amount only 

XYZ LTD IS OF THE FOLLOWING VIEW

It has come to our notice that double service tax is being charged due to current invoicing format.

Under the current invoicing format service tax is again charged on whole reimbursement expense (i.e. Hotel/F&B charges) which are already inclusive of all taxes.   

We shall now release 2 Purchase Orders for 1 event as mentioned below-

·         PO - 1: For Reimbursement of actual expenses i.e. F&B Charges, Hotel Charges etc. (which will be supported by proper documents with vendor’s invoice)

·         PO -2 : For Setup charges, Agency Fee or Management Fee and Service tax (Service tax excluding PO -1 Amount)

To save such type of double taxation; we suggest you to raise two separate Invoices in below manner which will avoid double taxation.

Kindly let us know if you are OK with the new format.

BUT FROM MY POINT OF VIEW AS PER SECTION 67 OF SERVICE TAX RULES, 2006