TDS deducted under 94J but engagement letter is of employment

[Deepak Bubna]

One tax payer filed ITR-3 claiming gross receipts under Income from Profession because the employer deducted TDS u/s 194J . However, the letter of engagement states that the tax payer was employee of the company. The tax payer did not register himself under service tax. The Service Tax department now wants to collect Service tax based on ITR filed and entries appearing in Form 26AS under the head 'Business or Profession'

AI Summary

Dispute Over Taxpayer's Status: Employee or Consultant? Service Tax Implications Under Section 194J Explored. A taxpayer filed an ITR-3 claiming income from a profession because TDS was deducted under section 194J, despite an engagement letter indicating employment. The Service Tax department seeks to collect service tax based on this filing and Form 26AS entries. Respondents discuss whether the taxpayer can be considered an employee or a consultant, considering the engagement letter and tax deductions. They highlight the importance of contract terms and suggest that litigation may be necessary. Some argue that the TDS deduction was a mistake, and the taxpayer should not be liable for service tax if an employer-employee relationship exists.