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TMI Blog2024 (12) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... MBAI] where it was held that ' There is nothing on record that indicates that the appellant had recovered that amount of Income Tax paid by them on such amount paid to the service provider from the outside India and any other material to hold that this amount is paid is consideration for services received from service provider.' The service tax cannot be demanded on the TDS amount which have been deducted from the taxable value - the impugned order-in-appeal is without any merit and is set aside - appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C. L. MAHAR, MEMBER (TECHNICAL) Shri S. Suriyanarayan, Advocate for the Appellant Shri Anoop Kumar Mudvel, Superintendent (AR) for the Respondent ORDER The brief facts of the matter are that the appellant has entered into agreement with M/s. Michel Huber Muenchem of Germany for supply of technical know-how and information and use of their trademark as well as brand new for a consideration. The appellant has paid an amount of USD 2 million or Rs.9,25,30,000/- to M/s. MHM, Germany during the period from 2006-07 to 2007-08. The appellant had paid service tax of Rs. 61,31,210/- towards the service category of IPR service o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon the following decisions to support his claim that service tax cannot be charged on the amount of the TDS which has been deducted by the service recipient for payment made to the service provider (i) Magarpatta Township Development and Construction Co Ltd reported 2016 (3) TMI 811 (ii) Indian Additives Ltd reported 2018 (6) TMI 523 . 4. We have also heard departmental representative who has reiterates the finding as given in the order-in-appeal. Having heard both the sides, it will be relevant to reproduce the findings which have been given by the learned Commissioner (Appeals) and his order dated 25.06.2013 the relevant paras are reproduced below:- 12. Out of the second installment of USD 1,500,000, the appellants paid USD 1,350,000 to GMBH on 14.08.2007 and TDS of USD 150,000 (INR equivalent of Rs. 64,86,000 @ 43.24 per USD] was paid to GOI on 07.07.2007. Whereas, the exchange rate for the same was taken as 40.765 for service tax purpose and the appellants discharged their service tax liability on INR 55,032,750 (USD 1,350,000 X 40.765) paid to GMBH and Rs. 61,14,750 (USD 150,000 x 40.765) paid as TDS. The department contends that the exchange rate of 46.91 [as existed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usand eight hundred eighty seven only) alongwith interest is upheld and rest of the demand is set aside. (ii) Penalty under Section 78 of FA, 1994 to the extent of Rs. 45,887/- (Rupees Forty five thousand eight hundred eighty seven only) is upheld. (iii) Penalty under Section 76 is also upheld subject to maximum of Rs.45,887/- (Rupees Forty five thousand eight hundred eighty seven only). 4.1 It can be seen from the above order of the learned Commissioner (Appeals) that the short payment of the service tax has been demanded on TDS amount. It is an established legal proposition that the amount of the TDS has to be deducted from the taxable value for charging service tax as per the provisions of Section 67 Finance Act, 1994 read with relevant service tax rules. While holding the above view we rely on this Tribunal decision in case of M/s. Magarpatta Township and Construction Co Ltd Vs. Commissioner of Central Excise Pune-ii reported under 2016 (3) TMI 811 CESTAT Mumbai. The relevant extract of the same reproduced here below:- 6. The issue that falls for consideration is whether the amount of Income Tax discharged by the appellant, on the amount paid by them to foreign architect needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other similar instruments but does not include currency that is held for its numismatic value; (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment. It can be seen from the above reproduced Section 67 it contemplates how the valuation of taxable service for charging Service Tax needs to be arrived and sub-section 1(i) 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, we find that Section 67(i) very clear mandates for discharging the Service Tax liability amount which is charged by the service provider is the amount. 8. Service Tax Valuation Rules, 2006 before amendment by Notification No. 24/2012-ST, specifically Rule 7 needs to be read to arrive at the correct value of taxable service provided from outside India relevant Rule is reproduced.- 7. Actual consideration to be the value of taxable service provided from outside India (1) The value of taxable service received under the provisions of Section 66A, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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