APPLICABILITY OF SERVICE TAX ON OUT OF POCKET EXPENSES

[SUMEDH AYARE]

ONE OF OUR SERVICE PROVIDER IS A CONSULTANT. HE HAS BOOKED AIR TICKETS ON HIS OWN FOR OUR WORK. HE HAS RAISED A SEPARATE BILL ONLY FOR REIMBURSEMENT OF TICKETS WITH 12.36 SERVICE TAX. WHETHER WE SHOULD PAY SERVICE TAX AFTER CONSIDERING THE RECENT HONOURABLE JUDGEMENT : 'INTERCONTINENTAL CONSULTANTS & TECHNOCRATS PVT. LTD. VS. UNION OF INDIA (2012 (12) TMI 150 - DELHI HIGH COURT)

[YAGAY andSUN]

Though, this judgment is in favour of assessees but revenue department will continue to raise objection on out of pocket expenses.

[SUMEDH AYARE]

WHETHER WE SHOULD PAY SERVICE TAX TO THE CONSULTANT.

[YAGAY andSUN]

Please check the facts of your matter, if such facts are similar to aforesaid judgment, then you should not pay the Service Tax on re-imbursement of expenses.

Further, if payment of Service tax is revenue neutral for you then you can pay it off.

All is dependent on your Risk Appetite.

AI Summary

Consultants Question Service Tax on Air Ticket Reimbursements; Caution Urged Despite Favorable Judgment A discussion on the applicability of service tax on out-of-pocket expenses incurred by a consultant for booking air tickets. The consultant issued a separate bill for ticket reimbursement, including a 12.36% service tax. The query references a Delhi High Court judgment in favor of assessees, questioning whether to pay the service tax. Responses suggest that despite the favorable judgment, the revenue department may object, and payment decisions should consider the specific case facts, potential revenue neutrality, and risk appetite.