Service Tax on reimbursement of exp.

[RAM SHARMA]

Dear Expert,

As a  Consignee Agent i am doing  sale of consignment goods on commission basis. Our income is  commision from sale. In spite of that we are reimburse transporation exp. and local handling/other charges from the company. would we include local handling and reimburesement exp in our gross income to assess the service tax liability.

Our income from commission is nine lacs and reimburse expenses is two lacs. Pl suggest.

Thanks

AI Summary

Reimbursed Expenses Not Taxable: Delhi High Court Clarifies Under Section 67, Finance Act 1994, Rule 5(1) Exclusion A consignee agent inquired whether reimbursement of transportation and local handling expenses should be included in gross income for service tax liability assessment. Their income from commission is nine lakhs, with reimbursed expenses totaling two lakhs. The expert clarified that under Section 67 of the Finance Act, 1994, only the gross amount charged for services is taxable. Rule 5(1) of the Rules suggests including all costs in the taxable value, but the Delhi High Court ruled that reimbursed expenses are not liable for service tax. Therefore, the two lakh reimbursement should not be subject to service tax.