TMI Blog2013 (2) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... y him and the same cannot be passed on to the foreign party. Thus the gross amount charged by the service provider cannot be treated as inclusive of TDS – Further as per Rule 7 of Service Tax (Determination of Value) Rules, 2006, actual consideration to be the value of taxable service provided from outside India. In the instant case, the gross amount charged by foreign party is only 370,000 GBP, which is not inclusive of TDS – Therefore TDS value need not to be included in the taxable value – In favour of assessee. There was no charging section for levy of Service tax on the service rendered by foreign national to a person in India prior to the insertion of Section 66A of the Act which took place on 18-4-2006 – Show Cause Notice was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the appellant had paid the Service tax on the value of service charges paid as service receiver after deducting TDS (Tax Deducted at source) from the value of service charges. 2.1 In terms of Section 67 of the Finance Act, 1994, Service tax is chargeable on the gross amount charged by the appellant and therefore the TDS amount is not excludible from the value. 2.2 Hence a Show Cause Notice No. 8/2008 dated 2-6-2008, was issued to the appellant proposing to demand of Rs. 8,77,829/- being the Service tax and Rs. 17,557/- towards Ed. Cess, in terms of proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 of the Finance Act, 1994 besides proposal for imposing penalties under Sections 76 and 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the submissions made already and also after filing written submissions during hearing, has submitted that inclusion of TDS amount is Taxable Value is not legally correct. To support his contention, he has drawn my attention to the Stay Order granted by the Tribunal, Chennai in a similar case in the case of TVS Motor Co. Ltd. v. CCE, Chennai [2009 (16) S.T.R. 729]. As regards imposition of equal penalty, Shri G.V. Shanmugasundaram, has submitted that the issue being revenue neutral, in the event of adding the TDS amount in taxable value, the question of imposing penalty and that too equal penalty is not sustainable. 5. I have carefully gone through the records of the case and submissions made by the appellant. The issue to be decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words the consideration received by the foreign service provider is independent of TDS amount. 5.3 As per Rule 7 of Service Tax (Determination of Value) Rules, 2006, actual consideration to be the value of taxable service provided from outside India.- (1) The value of taxable service received under the provisions of Section 66A, shall be such amount as is equal to the actual consideration charged for the services provided or to be provided. In the instant case, the gross amount charged by foreign party is only 92500 GBP per instalment, which is not inclusive of TDS amount that is to be paid in India. Hence, the gross taxable value for the service provided as per Rule 7(1) of Service Tax (Determination of Value) Rules, 2006 is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Indian National Shipowners Association (supra) with which we are in respectful agreement. Accordingly, the question of law is answered in favour of the assessee. The appeal is allowed and the impugned judgment passed by the Tribunal is set aside. No costs. The Hon ble Bombay High Court in the case of M/s. Indian National Shipowner s Association v. UOI - 2009 (13) S.T.R. 235 has held as follows : 20 It appears that it is the first time when the Act was amended and Section 66A was inserted by Finance Act, 2006 i.e. 18-4-2006, the Respondents got legal authority to levy Service tax on the recipients of the taxable service. Now, because of the enactment of Section 66A, a person who is resident in India or business in India become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Union of India against Indian National Ship owner s Association reported in 2010 (17) S.T.R. J57 (S.C.). 6. In view of the above stand taken by the Apex Court, I hold that the appellants are liable to pay Service tax on Consulting Engineer Service received from the foreign company as service receiver w.e.f. 18-4-2006 only. In other words the last two instalments paid to foreign service provider alone should suffer Service tax i.e. April 2006 and September 2006. 6.1 In this connection, I find that the appellant had made fervent plea that the Show Cause Notice issued on 2-6-2008 demanding Service tax for a period from July 2005 to March 2008 is hit by time-bar. As discussed in para 6 above the appellant need to pay Service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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