Service tax on a non taxable item purchased for a client

I think the client is right. Service Tax is payable on the charges for services. On purchase or sale of items, service tax is not attracted. In your case, it will be reimbursement of the cost of purchase. Here is the definition: "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include— (a) an activity which constitutes merely,–– (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force.

Originally posted by : Rahul Agarwal
	I think the client is right. Service Tax is payable on the charges for services. On purchase or sale of items, service tax is not attracted. In your case, it will be reimbursement of the cost of purchase. Here is the definition: "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include— (a) an activity which constitutes merely,–– (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force.

But that amount is going to be counted on my books because I am raising the invoice from my company. So don't I have to pay the service tax on the invoiced amount to governemnt because I purchased a tax free product for amy client and raised an invoice from my company.