TaxTMI 
TaxTMI 
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)
APPLICABILITY OF SERVICE TAX ON OUT OF POCKET EXPENSES
04 Mar 2013 
3 Replies 
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Service tax on reimbursements: taxable only when payments reflect a service element; assess facts and risk before paying.
Whether service tax applies to reimbursement of consultant booked travel depends on whether the payments are genuine pass through disbursements without markup. If documentary evidence shows a principal-agent relationship, segregation of costs, and no service element, the reimbursement is not taxable; revenue may still contest this on facts, so parties should decide based on factual alignment with precedent and their risk appetite or revenue neutrality considerations. (AI Summary)
Whether service tax applies to reimbursement of consultant booked travel depends on whether the payments are genuine pass through disbursements without markup. If documentary evidence shows a principal-agent relationship, segregation of costs, and no service element, the reimbursement is not taxable; revenue may still contest this on facts, so parties should decide based on factual alignment with precedent and their risk appetite or revenue neutrality considerations. (AI Summary)