K. Anpazhakan DECISION
K. Anpazhakan, Member (T)
1. The present appeal has been filed against Order in Appeal No. 130/2014 dated 24.9.2014. The issue involved in the present appeal is regarding the liability of service tax on TDS portion of the foreign currency remittance made by the Appellant for the services received.
2. Briefly stated facts of the case are that the appellant has imported services like testing, auditing, consultancy etc. from outside India against a consideration. Show Cause Notice was issued demanding differential service tax on the TDS paid by them to the Income Tax Department over and above the bill amount. The notice was adjudicated and the demand raised was confirmed by the adjudicating authority. On appeal, Commissioner (Appeals) upheld the same. Against the order impugned, the appellant has filed the present appeal.
3. The learned counsel for the appellant submits that as per Rule 7(1) of the Service Tax (Determination of Value) Rules, 2006, the value of taxable service received under the provisions of Section 66A shall be such amount as is equal to the consideration charged for the service provided or to be provided. The appellant submits that TDS paid would not be part of the consideration payable for the services rendered under Section 66A. The foreign service provider has categorically indicated the consideration payable to them. No tax was deducted from their invoice value. To comply with the provisions of Income Tax Act, 1961, they have grossed up the amount and paid their liability in terms of Section 195A of the Income Tax Act, 1961. The grossing up of amount under section 195A is only for the purpose of payment under Income Tax Act and not for computing the service tax. Accordingly, she contended that the demand of service tax confirmed on the TDS paid by them is not sustainable. The appellant further submits that the issue is no longer res integra as the said issue has already been decided by the Tribunal in favour of the appellant in the case of Adani Bunkering Pvt. Ltd. Vs. CCE, Ahmedabad - II reported in 2024 (1) TMI 984 - CESTAT Ahmedabad. Accordingly, she prayed for setting aside the demand confirmed in the impugned order.
4. The learned AR Shri M. Selvakumar reiterated the findings in the impugned order.
5. Heard both sides and perused the appeal documents.
6. We find that the appellant has imported services from the foreign service provider and paid the consideration as indicated in the invoice. No TDS has been deducted by them from the invoice value. The TDS paid by them was to comply with the provisions of the Income Tax Act. The appellant submits that service tax was paid on the gross value as per section 67 without making any deductions towards the "withholding of tax". We agree with the contention of the Appellant that the amount would not be part of the consideration for the taxable services received by them as per Section 67(1)(a) of the Finance Act, 1994. Accordingly, we observe that service tax is not payable on the TDS paid by the appellant on behalf of the foreign service provider.
7. We find that the issue is no longer 'res integra' as the same issue has already been decided by the Tribunal in the case of Adani Bunkering Pvt. Ltd. Vs. CCE, Ahmedabad - II reported in 2024 (1) TMI 984 - CESTAT Ahmedabad wherein the Tribunal has held that TDS deposited to the Income Tax Department in relation to the payment made to the foreign service provider over and above the invoice value of the services, is not liable to service tax. The relevant portion of the order is reprodu........