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Service tax applicable or not

R.Suresh (Sr. Executive) (394 Points)

05 January 2013

Dear All,

A company raise the Debit memo (Reimbursement of Travel Expense) to the Client, in that case whether the Service Tax is applicable or not.

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4 Replies

NareSh (Articles) (317 Points)
Replied 05 January 2013

Dear Suresh,

If service bill inculdes the travelling expenses the service tax appilicable on expenses.

If he claims the amount in seperate, it shall not attract the service tax.

sandeep (student) (188 Points)
Replied 05 January 2013

Service tax is only apply whn proper bill is raised by the service provider to the service reciever in this case service is not applicable since service provider has not rasied proper bill .proper bill is that bill which disclose service taken on it. Service tax is only can be claim whn service tax is paid by tranporter. Or the consignor at abtement.

Vikas (CA) (1135 Points)
Replied 08 January 2013

Yes, Service Tax shall be chargeable by virtue of Rule 5(1) of the Valuation Rules, 2006, as the onus to pay such expenses was on you and such expenses are used for providing output services.

However, a recent decision of High Court has given an opposite view.

But I would still say, you be on a safer side and follow Rule 5(1) instead of the above High Court Judgement.

Mallikharjun (Deputy Manager) (304 Points)
Replied 09 January 2013

If you are in a position to contest the department views, dont pay service tax on reimbursement of expenses. If you dont want any litigations, better pay on these expenses on safer side. Its always a debate whether to pay service tax on reimbursement of expenses.