TMI Blog2023 (10) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order that the benefit of Notification No. 17/2004-ST dt. 10.09.2004 would not be admissible to the appellant only on the ground that service tax was discharged by them under Sec. 66A of the Finance Act, 1994 on reverse charge mechanism basis. Inclusion of the TDS amount paid by the appellant - HELD THAT:- The issue has been recently considered by the Chennai Bench of this Tribunal in the case of M/S. VSL INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2023 (3) TMI 802 - CESTAT CHENNAI] whereunder this Tribunal after analysing the precedent and the relevant provisions held So, when such TDS is not received from the non-resident since it is not towards value/consideration, there is no merit in requiring such assessee to include even the TDS it paid in the value of services, as in the case on hand and the appellant was correct in not including the TDS amount in the value of taxable services. Thus, the TDS amount paid to the Income Tax department by the appellant from his own account cannot form part of the consideration of the service charges paid to the overseas service provider, accordingly, service tax is not payable on the TDS amount pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order, the present appeal is filed. 3.1 The ld. Advocate for the appellant has submitted that the appellant has received the right to use the licensed patent from FCI, France, in accordance with license agreement. In consideration, the appellant pays royalty to FCI, France on the gross revenue earned by the appellant. At the time of import, the appellant paid R D cess at the rate of 5% on the cost of the imported patent. The appellant had discharged service tax on the patent cost paid to FCI as a recipient of service under Section 66A of the Finance act, 1994. The ld. Advocate submits that for the purpose of payment of service tax, the appellant is entitled for the benefit under Notification No. 17/2004 ST dt. 10.09.2004, which exempts service tax as is equivalent to the amount of R D cess paid. In accordance with the said notification, the appellant deducted the amount equivalent to the R D cess paid from the said service tax payable and thereafter, paid the balance amount of service tax. The ld. Advocate has further submitted that the Notification No. 17/2004 ST dt. 10.09.2004 provides for exemption from the taxable services if provided by the holder of the IPR to any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 66A is also chargeable under Section 66 of the Finance Act, 1994. Further, she has referred to various case-laws listed as below:- (i) Rochem Separation Systems (India) P Ltd vs. CST 2015 (39) STR 112 (Tri. Mum.) (ii) CCE ST vs. Cummins Technologies India Ltd 2017 (7) GSTL 69 (Tri. Del.) (iii) United News of India vs. CST 2017 (51) STR 23 (Tri. Del.) 3.3 On the issue of inclusion of TDS amount in the value of Management of Consultancy Service, the ld. Advocate has submitted that the appellant has entered into a management service agreement with its group companies for receipt of general management services. As per the terms of the said agreement, the price of the services provided by the group entities to the appellant are understood as excluding taxes. All taxes which may be applied are also to be exclusively borne by the appellant as well. In terms of the agreement, the appellant has paid service tax as recipient of service, and the entire value as indicated in the invoice under the category of Management Consultancy Services, suffered tax. The appellant has also remitted the TDS amount in terms of the Income Tax Act on the gross amount. The TDS amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in confirming the demand is bad in law and hence the demand confirmed up to September 2012, is grossly barred by limitation. She has further submitted that the appellant have not suppressed any facts with intention to evade payment of duty in as much as they have been paying service tax on imports of services under both the categories. The appellant has regularly filed the ST-3 returns and clearly reflected in the said Returns that the exemption under Notification No. 17/2004-ST dt. 10.09.2004 has been available to them. Thus, there is no question of suppression of facts with respect to availing of the benefit of said notification; also, the TDS amount being paid to the government, no fact is suppressed. It is her contention that the department had complete knowledge of the transactions and the department s inaction at the time of discharge of service tax cannot be the ground for alleging suppression of fact etc. Further, it is submitted that the issues involved are interpretational in nature as is evident from the circular issued by board with respect to the credit availed under section 66A and the various case laws on the subject. Further, with respect to the demand on TDS, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in Rochem Separation Systems (India) Pvt Ltd s case (supra). This Tribunal analyzing Notification No. 17/2004-ST and charging Section 66 and Section 66A of the Finance Act, 1994 observed as follows: 10. The Commissioner has rejected the benefit of Notification No. 17/2004 for the reason that the notification applies only to Section 66 and not to Section 66A in which the appellant is required to pay service tax on the import of services or reverse charge basis. The Commissioner s further reasoning is that the appellant is only a deemed provider of service under Section 66A(1)(b) and cannot be treated as one who provided the service. This reasoning is flawed Section 66A was introduced by Finance Act, 2006 w.e.f. 18-4-2006 whereas the Notification No 17/2004 was issued on 10-9-2004. It appears that the law makers slipped on bringing an amendment to the notification because the intention of the notification is very clear, that is, not to levy service tax on cess paid towards the import of technology. Careful reading of the notification indicates that what is exempted is taxable service provided by the holder of the Intellectual Property Right to any person Service Tax Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t based on the interest rate applied by the European Central Bank to its most recent main refinancing operation plus ten (10) percentage points. Such amount shall be paid upon the invoicing party s request. 9.3 Any and all taxes which may be applied by any authorities or administrations on any invoices made pursuant this Agreement shall be exclusively borne by the invoiced entity. 9.4 In the event a country imposes a withholding tax against FCI USA LLC s invoices, Recipient shall pay to FCI USA LLC the necessary amounts that are necessary to ensure, receipt by FCI USA LLC of the full amount that FCI USA LLC would have received without the implementation of such withholding tax. In similar facts and circumstances the aforesaid issue has been recently considered by the Chennai Bench of this Tribunal in the case of VSL India Pvt Ltd vs. CST 2023 (3) TMI 802 CESTAT CHENNAI whereunder this Tribunal after analysing the precedent and the relevant provisions held as follows: 24.1 Now, we shall consider the issue of includability of TDS amount in the value of taxable services. Section 195 of the Income tax Act, 1961 deals with Tax to be deducted at source when paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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