Tribunal rules on TDS & service tax amount, grants waiver for remaining tax & penalties

The Tribunal ruled in favor of the appellants, holding that the amount taken for TDS purposes should not be considered as the gross amount for the services rendered. The Tribunal acknowledged the appellant's argument that the amount paid by the bank directly to customers should not be included in the gross receipt subject to service tax. As the appellants had already made a pre-deposit of Rs. 2 lakhs for service tax and Rs. one lakh for penalty, the Tribunal granted a waiver for the remaining service tax and penalties until the appeal's final disposal.

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Issues:
1. Dispute over the value of taxable services rendered by the appellants.
2. Whether the amount taken for TDS purposes should be considered as the gross amount for the service rendered.

Analysis:
1. The appellants are involved in rendering Business Auxiliary Services by facilitating vehicle financing for customers of a Bank. A discrepancy arises regarding the value of the taxable services provided. The appellant explains that while the bank deducts Rs. 10,000 per vehicle as Commission for TDS, only Rs. 2,000 is actually received by the appellants, with the remaining Rs. 8,000 being paid directly to customers by the bank. The revenue contends that the entire TDS amount should be treated as the gross amount for the service, potentially leading to a shortfall in service tax payment, prompting the initiation of proceedings. The appellant had already paid Rs. 2 lakhs towards service tax and Rs. one lakh as penalty.

2. The Tribunal deliberates on whether the gross amount received for services should align with the TDS deduction amount. The Departmental Representative cites a precedent where a similar issue was addressed. However, the appellant's Counsel argues that the amount paid by the bank to customers directly should not be considered part of the appellant's gross receipt and thus not subject to service tax. The Tribunal, after careful consideration, acknowledges the appellant's position, noting the pre-deposit of Rs. 2 lakhs for service tax and Rs. one lakh for penalty. Consequently, the Tribunal deems these amounts as sufficient pre-deposit, granting a waiver for the remaining service tax and penalties until the appeal's final disposal.

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