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Whether reimbursement of expenses attracts service tax?

Sonia M Ketkar (B.com CA DISA(ICA) Pursuing CS) (625 Points)

03 January 2014

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

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3 Replies

GAUTAM SHARMA (Audit Assistant) (353 Points)
Replied 03 January 2014

Please refer rule 5 of STVR, 2006

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 03 January 2014

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.