One of the client is engaged as contractor for mine owner for excavation of mineral ore. During this course incidental expenses are incurred on behalf of the mine owner. Subsequently reimbursement was made by mine owner. Do the reimbursement of expenses attracts Service Tax?
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Thanx in advance
Please refer rule 5 of STVR, 2006
Dear Sonia,
If the reimbursement is on actual basis, then the same should not attact service tax, but a lot depend on the facts & circumstances of the case and the agreement between parties. Moreover, Delhi High Court has held Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 as ultra vires section 67 of the Act.
the matter of delhi high court judgement is pending in supreme court.Untill it finalise, rule 5 will continue to apply
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