2025 (10) TMI 11

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....the liability of service tax on TDS portion of the foreign currency remittances for the services received by the appellant during the period from July 2012 to October 2013 under reverse charge mechanism. 3. Briefly stated facts of the case are that the appellant has imported services like testing, auditing, consultancy etc. from outside India against a consideration. Show Cause Notice was issued demanding differential service tax on the TDS paid by them to the Income Tax Department over and above the bill amount. The notice was adjudicated and the demand raised was confirmed by the Ld. Adjudicating Authority. On appeal, Ld. Commissioner (Appeals) upheld the same. Against the order impugned, the appellant has filed the present appeal. 4. M....

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....nal Order No. 40100/2024 dated 31.1.2024 has allowed the appeal of the appellant. 4.2 The learned AR Smt. Anandalakshmi Ganeshram, reiterated the findings in the impugned order. 5. Heard both sides and perused the appeal documents. 6. We find 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 appellant submits that service tax was paid on the gross value as per section 67 without making any deductions towards the "withholding of tax". We agree with the contention of the Appellant that the amount would not be part of the co....

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....ome'. Thus, the TDS is a tax obligation which can never partake the character of value or consideration for the transaction or of the goods or of services. It is not uncommon that any business contract/agreement inter-se parties primarily focuses on the value/consideration and then spells out as to who would bear the TDS obligation. This cannot be construed as to mean that TDS is also a part of such value/consideration. This is also because, any value/consideration agreed upon is strictly the choice of the parties but the TDS depends on the rate in force at the relevant point of time. 24.2 Thus, when it is contended that the assessee 'grossed up' the TDS, it is understood to mean that the assessee has indeed received only the ....