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2024 (1) TMI 984 - AT - Service TaxDemand of service tax - Valuation -TDS deposited to the Income Tax department in relation to the payment made to the Foreign Service Provider - the TDS is over and above the invoice value of service - Extended period of limitation - HELD THAT - As per the un-disputed fact the appellant have paid the service tax on the total value of the invoice raised by the Foreign Service Provider under reverse charge mechanisms. As per the Income Tax Act, the appellant have discharged the TDS on the invoice value and the same was borne by the appellant. In this position, since the TDS is not a part and partial of gross value of the service, the same cannot be taxed under Finance Act, 1994. As per Section 67, it is clear provision that the only the gross value towards the service paid or payable shall be chargeable to Service Tax. In this case the gross value is the value of invoice on which service tax was discharged. It can be seen from Section 67 that it contemplates how the valuation of taxable service for charging Service Tax needs to be arrived and sub-section 1(1) provides for valuation wherein consideration paid in money, be the gross amount charged by the service provider. The phrase gross amount charged also is explained in the said Section. Reading holistically, it is found that Section 67(1) very clear mandates for discharging the Service Tax liability amount which is charged by the service provider is the amount. It can be seen that in M/S. HINDUSTAN OIL EXPLORATION CO. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE 2019 (2) TMI 1248 - CESTAT CHENNAI in the identical facts it was held that the TDS deposited which is over and above the invoice value cannot be charged to service tax. Accordingly, the demand in the present case is not sustainable, hence the impugned order is set aside - appeal allowed.
Issues Involved:
1. Liability to pay service tax on TDS deposited over and above the invoice value. 2. Applicability of Section 67 of the Finance Act, 1994. 3. Exemption under Section 26 of the SEZ Act. 4. Bar of limitation on the show cause notice. Summary: 1. Liability to pay service tax on TDS deposited over and above the invoice value: The primary issue was whether the appellant is liable to pay service tax on the TDS deposited to the Income Tax department over and above the invoice value of the service provided by a Foreign Service Provider. The appellant argued that service tax is not liable on TDS if it is paid over and above the invoice amount and borne by the service recipient, citing several precedents including *Mangarpatta Township Dev. & Construction Co. Ltd. vs. C.C.E., Pune -III* and *Hindustan Oil Exploration Co. Ltd. Vs. Commr. of GST & C. EX., Chennai*. 2. Applicability of Section 67 of the Finance Act, 1994: The appellant contended that as per Section 67 of the Finance Act, 1994, the value of taxable services should be the gross amount charged by the service provider, which in this case is the invoice value. The TDS paid separately by the appellant was not collected from the service provider and thus should not be included in the taxable value. The Tribunal agreed, stating that TDS is not part of the gross value of the service and cannot be taxed under the Finance Act, 1994. 3. Exemption under Section 26 of the SEZ Act: The appellant also argued that services availed and consumed within SEZ are exempt under Section 26 of the SEZ Act, supported by the judgment in *GMR Aerospace Engineering Ltd. Vs. Union of India*. However, the Tribunal did not address this issue as the matter was decided on merit. 4. Bar of limitation on the show cause notice: The appellant claimed that the show cause notice was barred by limitation, as there was no evidence of mala fide intention to evade service tax. The Tribunal did not address this issue, as the primary matter was resolved on merits. Judgment: The Tribunal concluded that the TDS deposited over and above the invoice value cannot be charged to service tax. The demand was deemed unsustainable, and the impugned order was set aside. The appeal was allowed with consequential relief.
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