Service tax on reimbursement of rent

Prasanna Simha (Querist) 10 February 2017 This query is : Open
Hi All,

One of my client has used a place for rent to shoot a serial for a channel. Rent is paid along with service tax from my client. Channel has reimbursed only the rent part. Since, my client has bonafide paid the service tax, has claimed input on those rent expenses. Now, the department is of view that:
01. My client cannot claim input on rent paid by him.
02. All reimbursement of expenses incurred on behalf of channel, later reimbursed by channel are to offered for service tax.
03. Even special / promotional episodes are also treated as income, where my client has made a expenditure on behalf of channel and later got reimbursed.

Whether the point of view of department is correct? Can this be litigated? All these expenses are prior to March 2015.

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