2024 (2) TMI 16 - AT - Service Tax

Tribunal Rules TDS on Foreign Remittance Not Subject to Service Tax, Overturns Prior Decisions.

The Tribunal ruled in favor of the appellant, setting aside the demand for service tax on the TDS portion of foreign currency remittance for services ... Levy of Service Tax - TDS portion of the foreign currency remittance made by the Appellant for the services received - HELD THAT:- The appellant has imported services from the foreign service provider and paid the consideration as indicated in the invoice. No TDS has been deducted by them from the invoice value. The TDS paid by them was to comply with the provisions of the Income Tax Act - the contention of the Appellant is agreed upon that the amount would not be part of the consideration for the taxable services received by them as per Section 67(1)(a) of the Finance Act, 1994. Accordingly, service tax is not payable on the TDS paid by the appellant on behalf of the foreign service provider. The issue is no longer ‘res integra’ as the same issue has already been decided by the Tribunal in the case of ADANI BUNKERING PVT. LTD VERSUS COMMISSIONER OF C.E., AHMEDABAD-II [2024 (1) TMI 984 - CESTAT AHMEDABAD] wherein the Tribunal has held that TDS deposited to the Income Tax Department in relation to the payment made to the foreign service provider over and above the invoice value of the services, is not liable to service tax. The appellant is not liable to pay service tax on the TDS paid by them on behalf of the foreign service provider - the demand confirmed in the impugned order is not sustainable and the same is set aside - appeal allowed. Issues involved:The liability of service tax on TDS portion of foreign currency remittance made for services received.Summary:The appeal was filed against the order regarding the liability of service tax on the TDS portion of foreign currency remittance made for services received. The appellant imported services from outside India and paid the consideration as indicated in the invoice. The TDS paid was to comply with the Income Tax Act, and the appellant argued that service tax should not be payable on the TDS amount. The Tribunal agreed with the appellant, citing Section 67(1)(a) of the Finance Act, 1994, and a previous case where it was held that TDS deposited over and above the invoice value is not liable to service tax. The Tribunal set aside the demand for service tax on the TDS paid by the appellant.Judgment Details:The appellant imported services like testing, auditing, consultancy, etc., from outside India against a consideration. A Show Cause Notice was issued demanding differential service tax on the TDS paid by the appellant to the Income Tax Department over and above the bill amount. The demand was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals). The appellant argued that TDS paid should not be considered part of the consideration for taxable services received, as it was paid to comply with the Income Tax Act. The Tribunal agreed with the appellant, citing previous judgments, and held that service tax is not payable on the TDS amount. The impugned order was set aside, and the appeal was allowed.