2018 (8) TMI 1010 - AT - Service Tax

Whether the service tax attributed to TDS deducted by the service tax recipient is refundable to the service provider? Held that - The service charge which is billed by the service provider is a gross value in terms of section 67 of the Finance Act, 1994. TDS even if deductible by the service recipient, it is available to the service provider for adjustment against their tax liability - the service tax is chargeable on the gross amount and not on the amount excluding the TDS. Appeal dismissed - decided against appellant.

Summary

Issues involved:
Whether the service tax attributed to TDS deducted by the service tax recipient is refundable to the service provider.

Analysis:
The case involved a dispute regarding the refundability of service tax attributed to TDS deducted by the service tax recipient to the service provider. The appellant did not appear, while the respondent, represented by Shri Gobind Jha, Supdt. (AR), argued that the service tax is payable even on the TDS deducted by the service recipient, as it is part of the gross value. The Ld. Commissioner (A) had given a detailed finding stating that the service tax liability is to be discharged by the service provider on the gross amount charged, not on the amount excluding the TDS. The appellant had filed a refund claim with relevant documents, but failed to provide statutory records supporting their claim of having paid more tax than received. The Tribunal concurred with the view that the service tax is chargeable on the gross amount, including TDS, and upheld the lower authority's decision to reject the refund claim. The appeal was dismissed based on this analysis.

This judgment clarifies that the service tax is to be calculated on the gross amount charged by the service provider, inclusive of any TDS deducted by the service recipient. The Tribunal emphasized that TDS, although deducted by the recipient, is available to the service provider for adjustment against their tax liability. The decision highlights the importance of complying with statutory requirements and providing necessary documentation to support refund claims in tax matters. The ruling reaffirms the principle that the service tax liability is based on the gross value as per the relevant provisions of the Finance Act, 1994, and not on the net amount received after deduction of TDS. The judgment serves as a reminder for taxpayers to accurately assess and fulfill their tax obligations in accordance with the law to avoid disputes and ensure compliance with tax regulations.