Service tax valuation excludes separately borne TDS over invoice value where reverse charge tax was already discharged.

Service tax under Section 67 of the Finance Act, 1994 is confined to the gross amount charged by the service provider, so a tax deducted at source amount borne by the assessee and paid separately over and above the foreign service provider's invoice value did not form part of the taxable value. Where service tax had already been discharged on the invoice value under reverse charge, the separately borne TDS was not consideration passing to the service provider and could not be brought to tax. On that basis, the demand was held unsustainable.

---

---

Issues: Whether service tax could be levied on the tax deducted at source amount borne by the assessee and paid over and above the invoice value of the foreign service provider.

Analysis: The value of taxable service under Section 67 of the Finance Act, 1994 is the gross amount charged by the service provider. The assessee had already discharged service tax on the invoice value under reverse charge mechanism, and the TDS paid separately by the assessee was not part of the consideration paid to the foreign service provider. Since the TDS was borne from the assessee's own pocket and was not recovered from the service provider, it could not form part of the taxable value. The decision also followed earlier precedents holding that TDS borne over and above the invoice value does not attract service tax.

Conclusion: Service tax was not payable on the TDS amount; the demand was unsustainable and the assessee succeeded.

---