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TMI Blog2023 (3) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... as agreed upon by the parties has been paid to service provider, therefore, the amount of TDS cannot be included in the taxable value to determine the Service Tax liability. Therefore, as TDS liability has been borne by the Appellant and the value of service provided has already been paid to the service provider, the Appellant has correctly arrived at the taxable value of service received by them and paid the Service Tax thereon correctly under reverse charge mechanism. There are no merits in the impugned orders, the same are set aside - the Appeals filed by the Appellant are allowed. - HON BLE SHRI ASHOK JINDAL, MEMBER(JUDICIAL) AND HON BLE SHRI K. ANPAZHAKAN, MEMBER(TECHNICAL) Shri Jynesh Mohanty, Advocate for the Appellant (s) Shri A.Roy, Authorized Representative for the Respondent (s) ASHOK JINDAL The Appellant is in Appeal against the impugned orders wherein demand of Service Tax has been confirmed on account of undervaluation. 2. The facts of the case are that the Appellant is engaged in the business of manufacture of fertilizer, falling under Chapter 31 of the CETA, 1985. During the period under dispute, they received Scientific Technical Consultancy Services from various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant discharged service tax on the actual amount of consideration agreed upon and paid to the service provider. The amount of consideration is grossed up by the Appellant only for the purpose of payment of TDS and the TDS liability is fully borne by the Appellant. 8. He also submits that the issue is no longer res integra as has been settled by this Tribunal in the following decisions:- a) M/s. Magarpatta Township Development Construction Co.Ltd. Vs. CCE [2016 (43) STR -132 (Tri.Mum)] b) M/s. Garware Polyster Ltd. Vs. Commissioner, Central Tax Customs [2017 (5) GSTL 274 (Tri.-Mum)] c) M/s. Hindustan Oil Exploration Co.Ltd. Vs. Commissioner of GST C.E. [2019 (25) GSTL 252 (Tri.-Chennai)] d) M/s. Indian Additives Ltd. Vs. Commissioner [2018 (6) TMI 523 (CESTAT, Chennai)] e) M/s. TVS Motor Company Ltd. Vs. Commr. Of C. Ex ST, Chennai [2021 (5) GSTL 459 (Tri.-Chennai)] Therefore, he prayed that the impugned orders are to be set aside and Appeals be allowed. 9. On the other hand, the Ld.Authorized Representative for the Department opposed the contention of the Ld.Counsel and submits that as per the terms of agreement, if the foreign service provider gets the refund of Income Tax paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation. The situation would be different if the TDS is deducted from the actual consideration and is not borne by the Indian counterpart. When the foreign counterpart does not agree to forego the TDS portion from the consideration agreed, then it becomes legally incumbent upon the appellant to gross up the value as under Section 195A. 14.2.2 For the purposes of discharging their obligation of deducting tax at source, the appellants have grossed up the TDS to the actual consideration. After deposit of TDS, the service provider has received only the amount that has been agreed between the parties. There is no dispute about the fact that TDS amount has been borne by appellant. It is mentioned in paragraph 3 of the Show Cause Notice dated 19-11-2007 itself, which reads as under : As per Section 67 of the Finance Act, 1994, ...where service tax is chargeable on any taxable service with reference to its value, then such value shall - (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him. In view of the above, it appears that the TDS charges, which was borne by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid by them to such consultant. He would then take us through the provision of Section 67 of the Finance Act, 1994 and submit that the said Section contemplates discharge of Service Tax liability on the gross amount charged by the service provider. He would submit that the architect has charged the gross amount that indicated in the agreement. Subsequently, Learned Counsel would take us through the provision of Service Tax (Determination of Value) Rules, 2006, as per Rule 7 during the relevant period, the provisions were very clear as to actual consultant charges need to be taxed. For this purpose, he relied upon the judgment of the Tribunal in the case of Commissioner of Central Excise, Raigad v. Jawaharlal Nehru Port Trust P. Ltd. - 2015 (40) S.T.R. 533 (Tri. - Mumbai). The Tribunal in the above decision had set aside the demand. Following the same, the demand under this category requires to be set aside, which we hereby do. 14.4.2 In M/s. Indian Additives Ltd. (supra), the issue has been discussed as under : 5. The issue to be decided is whether the appellant is liable to pay service tax on the alleged deducted portion of TDS from the royalty paid to the foreign company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 7 of Service Tax Valuation in this case in hand, Service Tax liability needs to be discharged on amounts which have been billed by the service provider. 14.4.3 In the case of M/s. Centre for High Technology (supra), the Tribunal discussed the issue and held in favour of the assessee, which reads as under : 10. After the considering the arguments made by both sides and perusal of record, we note that dispute is with reference to the amount paid as Withholding Tax which was on top of the amounts paid to M/s. Shell for the consultancy. It is not in dispute that the entire consideration for consultancy, as per the agreement, has been offered for payment of Service Tax by the appellant. The Revenue s view is that the withholding tax also needs to be included for payment of Service Tax is not justified as has been held by the Tribunal in the cited decision. We reproduce below the relevant part of the decision. 8. Service Tax Valuation Rules, 2006 before amendment by Notification No. 24/2012-S.T., specifically Rule 7 needs to be read to arrive at the correct value of taxable service provided from outside India relevant Rule is reproduced :- Actual consideration to be the value of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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