Whether Service tax is liable to pay on reimbursement of exp.

[Yatin Bhopi]

Dear experts

We are Multinational company. Recruitment of officers for Indian subsidiaries done by our parent company situated in USA. Parent company hire Indian company to recruit officers by taking interviews and selection process. Recruitment agency raised bill to parent company (in the bill they mentioned all their PAN card and Service Tax registration number etc) and parent company pay their bill.

Our parent company recover this expenses from us as it is (they also provide us Indian recruitment agency’s bill for supporting)

Whether Service tax is payable by us? ( primarily there will be no Service tax liability on Indian recruitment agency, since this will be export of service to them)

AI Summary

Reimbursement of expenses: intercompany cost recovery does not create service tax liability when provider bears tax.
Levy of service tax rests on the service provider because the place of provision and receipt of the recruitment service is in India. Reimbursement by the Indian subsidiary to its foreign parent for amounts the parent paid to an Indian recruitment agency is a cost recovery and not a taxable service. The taxable value, if any, is determined by the recruitment agency's bills; the intercompany recharge does not create a separate service tax liability for the subsidiary.