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2024 (6) TMI 769 - AT - Service TaxIssues Involved: 1. Liability to pay service tax on TDS deposited in the Income Tax Department. 2. Inclusion of TDS amount in the value of taxable services provided by foreign service providers. Summary: Issue 1: Liability to pay service tax on TDS deposited in the Income Tax Department The appellant, engaged in the manufacture of aluminum, received scientific and technical consultancy services from overseas parties and paid service tax on the gross amount of invoices under the reverse charge mechanism u/s 68(2) of the Finance Act, 1994 for the period April 2008 to August 2010. The appellant deducted tax at source and paid it to the Income Tax Department as per the terms of the agreement with the service providers. An audit for the period 2008-09 observed that the appellant did not include the TDS amount in the value of taxable services, resulting in a short payment of service tax. Consequently, a show-cause notice dated 26.04.2013 was issued, and the demand for service tax was confirmed along with interest and penalties. The appellant appealed against this order. Issue 2: Inclusion of TDS amount in the value of taxable services provided by foreign service providers The appellant argued that the issue had already been decided by the Tribunal in their favor for an earlier period, making the issue no more res integra. The Tribunal had previously observed that the income tax component deducted at source, if refunded to the service provider, would be refunded to the appellant itself. Therefore, the value of the service provided by the foreign service provider remains the same, and the TDS borne by the appellant should not be included in the taxable value. The Tribunal referred to several cases, including TVS Motor Company Ltd., Hindustan Oil Exploration Co. Ltd., and Indian Additives Ltd., where it was held that TDS paid by the appellant out of a statutory liability should not be considered as consideration for services rendered. The Tribunal concluded that the appellant had correctly arrived at the taxable value of the service received and paid the service tax thereon correctly under the reverse charge mechanism. Conclusion: The Tribunal found no merits in the impugned order and set it aside. The appeal was allowed with consequential relief, if any. The operative part of the order was pronounced in the open court.
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