International Flavours And Fragrances India Pvt. Ltd. vs. Commissioner of GST & Central Excise - (Customs, Excise and Service Tax Appellate Tribunal) (31 Jan 2024)

TDS deposited to IT Department in relation to the payment made to foreign service provider over and above invoice value of services, is not liable to service tax

MANU/CC/0030/2024

Service Tax

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 adjudicating authority. On appeal, Commissioner (Appeals) upheld the same. Against the order impugned, the appellant has filed the present appeal.

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". 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. Vs. CCE, 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 decision cited above is squarely applicable to the present case on hand. By following the ratio of the decision, present Tribunal hold that, the Appellant is not liable to pay service tax on the TDS paid by them on behalf of the foreign service provider. Accordingly, the demand confirmed in the impugned order is not sustainable and set aside the same. The impugned order is set aside. Appeal allowed.

Tags : DEMAND CONFIRMATION LEGALITY