Service Tax Payable on Reimbursment Expenses under Consulting Engineer Service

[Asked by 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 valuation: reimbursed expenses may be excluded after court struck down expense inclusion rule, causing interim uncertainty.
Whether service tax is payable on reimbursements in consulting engineer invoices where professional fees and travel reimbursements are billed separately. A court held the rule mandating inclusion of provider-incurred expenditures in taxable value to be ultra vires, suggesting recovered expenses may be excluded from taxable value; this reasoning is argued to carry over under the negative list regime, creating interim uncertainty about charging service tax on expense recoveries.