Imported service tax valuation limited to actual consideration, excluding recipient-paid income tax from taxable value.

For imported services, service tax under reverse charge is computed on the actual consideration or gross amount charged for the service, not on a recipient-paid tax burden that is outside the service consideration. The record showed tax had already been discharged on the foreign architect's billed consultancy fee, and there was no basis to treat the income tax borne by the recipient as part of the taxable value. Service tax could not therefore be fastened on that amount, and liability remained confined to the sum actually billed by the foreign architect.

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Issues: Whether service tax under reverse charge was payable on the amount of income tax borne by the recipient, in addition to the consideration actually billed by the foreign architect.

Analysis: The liability under section 67 of the Finance Act, 1994 is to be computed on the gross amount charged by the service provider. For services received from outside India, rule 7 of the Service Tax Valuation Rules, 2006 requires the value to be the actual consideration charged for the services. The record showed that service tax had already been discharged on the billed consultancy amount, and there was no material to treat the income tax paid by the recipient as part of the consideration for the foreign service.

Conclusion: Service tax could not be fastened on the amount of income tax paid by the recipient, and the tax liability was confined to the amount actually billed by the foreign architect, in favour of the assessee.

Ratio Decidendi: For imported services, service tax is chargeable only on the actual consideration or gross amount charged for the service, and a recipient-paid tax burden that is not part of the service consideration does not form part of the taxable value.

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