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 received. The appellant argued that TDS paid to comply with the Income Tax Act should not be included in the taxable amount for service tax purposes. The Tribunal agreed, referencing Section 67(1)(a) of the Finance Act, 1994, and prior case law, concluding that TDS paid over and above the invoice value is not subject to service tax. The appeal was allowed, overturning the previous decisions by the adjudicating authority and the Commissioner (Appeals).

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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.

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