Reimbursable expenses excluded from service tax value for consulting engineers; only the service fee is taxable.

Reimbursable travel and other out-of-pocket expenses incurred by a service recipient for consulting engineers were held not to form part of the assessable value for service tax. The Tribunal followed prior decisions that excluded reimbursable expenses from the taxable value and noted that Board instructions also supported taxation only on the service fee, not on reimbursements. On that basis, the reimbursable charges were excluded from the taxable value and the demand could not be sustained.

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Issues: Whether reimbursable travel and other expenses incurred by the service recipient for consulting engineers were includible in the assessable value for service tax.

Analysis: The issue was treated as already settled by prior Tribunal decisions holding that reimbursable expenses do not form part of the value of taxable services. The Board instructions referred to in the order also stated that reimbursable expenses are excluded from the taxable value, supporting the view that only the service fee, and not such out-of-pocket reimbursements, could be taxed.

Conclusion: The reimbursable charges were not includible in the taxable value, and the demand could not be sustained.

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