Service tax valuation excludes TDS borne on royalty where tax was already paid on invoiced foreign service consideration.

Service tax on technical assistance services received from outside India was confined to the actual consideration charged for the service, and not to the TDS portion of royalty borne by the recipient. The record showed that tax had already been discharged on the invoiced amount, and there was no material to treat the TDS component as part of the consideration for valuation purposes. Following the same principle applied in the assessee's earlier matter, the demand on the TDS amount was held unsustainable and set aside.

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Issues: Whether service tax could be levied on the TDS portion of royalty borne by the appellant for technical assistance services received from outside India.

Analysis: The dispute turned on valuation of the taxable service. The applicable rule on services received from outside India required service tax to be computed on the actual consideration charged for the service. The record showed that the appellant had discharged tax on the consideration invoiced by the foreign service provider, and there was no material to show that the TDS amount formed part of the consideration charged for the service. The earlier order in the appellant's own case, following the same principle, was relied upon.

Conclusion: Service tax was not leviable on the TDS portion borne by the appellant. The demand on that amount was unsustainable and was set aside in favour of the assessee.

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