Service Tax Payable on Reimbursment Expenses under Consulting Engineer Service

[Guest]

Dear Sir,

We have paid Professional/Consultancy charges to an Engineer who is came from out of India (Foreign Engineer) in his consultancy charges invoice there is some amount of Professional Consultancy Charges & some amount of Reimbursement of traveling expenses (traveling expenses & Professional Fees Charges he has mentioned separately in his invoice as per income tax rule Under Sec 195 we have deducted TDS on Professional fees only,

Now service tax liability thereon under “Consulting Engineer Service” my query is that on which amount service tax is payable.

1. Total Invoice amount (including of Reimbursement of Traveling Expenses)
2. Total Consultancy Charges amount

Please guide us in this matter & also let us know which Service Tax rules is applicable.

Regards,

Rahul Patel

AI Summary

Service Tax on Reimbursed Expenses Under 'Consulting Engineer Service' Excludes Reimbursements Per Rule 5(1) Decision A query was raised regarding the service tax liability on reimbursed expenses under 'Consulting Engineer Service' for consultancy charges paid to a foreign engineer. The question was whether service tax is payable on the total invoice amount, including reimbursement of travel expenses, or solely on consultancy charges. A response referenced a Delhi High Court decision, noting that Rule 5(1) of the Service Tax (Determination of Value Rules, 2006) was deemed ultra vires, suggesting that service tax should not include reimbursed expenses. Another response questioned who would pay the service tax if a foreign technician provides services exclusively to a company in India.