Reimbursed travelling expenses are excluded from service tax value unless proved to be consideration for the service rendered.

Reimbursement of travelling and other out-of-pocket expenses received by a service provider is not includible in the taxable value unless the amounts are shown to be consideration for the service. Applying Section 67 of the Finance Act, 1994 and binding Supreme Court precedent, the Tribunal held that only the consideration for the service rendered forms part of the assessable value. In the absence of material showing disguised consideration, the service tax demand could not be sustained.

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Issues: Whether reimbursement of travelling expenses received by the service provider was includible in the taxable value for levy of service tax.

Analysis: The governing principle applied was that service tax under Section 67 of the Finance Act, 1994 is leviable on the consideration for the service rendered, and reimbursement of expenses, including travelling and similar out-of-pocket costs, does not form part of the taxable value unless shown to be consideration for the service. The Tribunal followed the binding Supreme Court ruling and its own earlier decision holding that reimbursed expenses are not includible in assessable value in the absence of material showing that such amounts were a disguised consideration.

Conclusion: The reimbursement of travelling expenses was not includible in the taxable value, and the service tax demand could not be sustained.

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