Out of pocket expenses

If out of pocket is incurred first and the same is getting reimbursed later from the service receiver then the same should be included in the taxable income and service tax should be paid.

Service tax is leviable on gross amount charged.

Gross amount charged includes reimbursement of out of pocket expenses. Hence, the same shall be included in the value of taxable services.

However, if the expediture is incurred as a pure agent and reimbursement is made in respect thereof, no ST liability arises. 

The issue has been settled with Tribunal's judgment in case of Amit Sales.