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TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 15
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....ng tunnel boring etc; in execution of their work, they engaged foreign service providers i.e. M/s Amberg, Singapore for technical support in the execution of work related to tunnel boring machine; during the audit of the appellant, Departmental officers found that the appellants had discharged the service tax, on Reverse Charge Mechanism on the services availed by them from the foreign suppliers, during 2007-08 and up to October 2008 in 2008-09, including the amount paid towards TDS of Income Tax and thereafter, they did not include the TDS amount for discharging the service tax. Accordingly, a show-cause cum demand notice dated 02.09.2011 was issued to the appellants demanding service tax of Rs.1,15,23,010/- for the period 2008-09 to 2010-....
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....ated 02.11.2007 with M/s ITD, Thailand was shown to the Adjudicating Authority; the Adjudicating Authority did not appreciate the theory of the whole taxation and TDS under Income Tax; however, service tax is to be levied on the consideration paid for the service and not on other taxes and duties. 4. Learned Counsel further submits that the issue is no longer res integra having been decided by the Tribunal in the case of TVS Motor Company Ltd. - 2021 (55) GSTL 459 (Tri. Chennai); further, in their own case Commissioner (Appeals) has dropped the proceedings initiated against them for the further period from 2012-13 to 2014-15. He relies upon the following cases: Magarpatta Township Development & Construction Co. Ltd. - 2016 (43) ....
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.... or after provision of such service. Learned Authorized Representative further submits that the case of TVS Motor Company (supra) is not applicable as the facts the different. He further submits that the appellants did not provide the copy of the agreement to the Adjudicating Authority in respect of the invoices considered in the impugned order. 6. Heard both sides and perused the records of the case. Brief issue that requires our consideration in the impugned case is as to whether, TDS paid by the appellants to the Income Tax Department, in terms of Section 195A of the Income Tax Act, should be included in the gross amount for the purpose of calculation of service tax payable by the appellants in terms of Rule 2 (1)(d)(iv) of Service Ta....
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.... 195 uses "any sum" instead of "any income by way of". This would mean any sum that is paid to the non-resident which bears the character of income and gross amount, the whole of which may or may not represent income or profits. It is also a requirement that the document should mention that the Indian Counterpart of the transaction would bear the tax for deducting TDS by grossing up the value. To comply with this provision, as per the accounting practice, the appellant has grossed up the TDS amount with the actual consideration. Section 195A of the Income-tax Act reads as under : "where under an agreement or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by....
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....ity from the agreed consideration. While doing business with the foreign counterpart and making payment, they are bound to deduct the tax and deposit with the Government. The appellants have thus grossed up the TDS and complied with the statutory obligation. The situation would be different if the TDS is deducted from the actual consideration and is not borne by the Indian counterpart. When the foreign counterpart does not agree to forego the TDS portion from the consideration agreed, then it becomes legally incumbent upon the appellant to gross up the value as under Section 195A. 7. We further find that the in above decision, the Tribunal has referred to the judgments of the Tribunal in the case of Indian Additives Ltd. (supra) and Cent....
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.... case decided by the Commissioner (Appeals) in favour of the appellants in their own case for the subsequent period. Therefore, we are of the considered opinion that the issue is no longer res integra. We do not find any reason to come to a conclusion that the facts of the case are different as submitted by the learned Authorized Representative for the Department. Moreover, we find that the impugned show-cause notice and the Order do not base their arguments on the conditions of the contract; they hold that TDS per se is includable in the gross value for calculation of service tax. In view of the judgments discussed or cited above, principally, the same is not tenable. The learned Counsel for the appellants submits that the SCN is barred by....