Applicability and liability of service tax on supervising and traveling expenses

[PRADEEP KUMAR]

We are manufacturer & material supplied to customer. During the erection, we have appointed one consultant or contract basis which name is franklin for supervision for erection. Franklin charged supervision exps on us & we have raised Debit Note for reimbusment of supervision charges to customer. (1) we have reimbusement of supervision charges, service tax applicable or not? if applicable, under which catagory? What about travelling exps? (2) If we appointed one employee & directly send to customer, we have charged for supervision in favour of customer, what about service tax on supervison exps and travelling exps? (3) if we have changes name of Deputation from supervison, what about service tax on Deputation & travelling exps? (4) IF Word changes inspection charges from supervisin charges, what is impact of service tax, liable or not?

AI Summary

Service tax on reimbursement hinges on pure agent status; classification of supervisory services controls liability.
Applicability of service tax on supervision and travel reimbursements turns on whether the supplier is acting as a pure agent; reimbursements made as pure agent pass-throughs are not taxable. If not a pure agent, the supervisory activity must be classified by its true nature (consultancy, management, etc.) to determine taxable service category. Conveyance or travel reimbursements treated as outlays do not attract service tax. Nomenclature such as deputation, supervision or inspection does not determine liability; valuation rules and the statutory service classification govern chargeability.