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M/s. Magarpatta Township Development And Construction Co. Ltd. Versus Commissioner of Central Excise, Pune-III

2016 (3) TMI 811 - CESTAT MUMBAI

Liability of Service tax on TDS amount absorbed by the assessee on foreign remittance - Reverse charge as per provision of Section 66(A) of the Finance Act, 1994 - Reverse Charge Mechanism - Amount paid to foreign architect as consultancy charges under Technical Consultancy Services - Department contended that appellant having discharged the Income Tax liability on the amount so paid, Service Tax liability arises on the Income Tax amount deducted as TDS and paid to Government of India - Held tha .....

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s which have been billed by the service provider. Therefore, appellant is not liable to pay service tax. - Decided in favour of appellant with consequential relief - Appeal No. ST/322/12-Mum - Final Order No. A/86339/2016-WZB/STB - Dated:- 24-2-2016 - M V Ravindran, Member (J) And C J Mathew, Member (T) For the Appellant : Shri Prasad Paranjape, Adv For the Respondent : Shri V K Kaushik, AR (CR) ORDER Per M V Ravindran This appeal is directed against the Order-in-Appeal No. PIII/RS/118/2012 date .....

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ed to discharge the Service Tax liability under 'Reverse Charge Mechanism' on the amount paid. Both the lower authorities did not agree with the contention raised by the appellant and held that the appellant having discharged the Income Tax liability on the amount so paid, Service Tax liability arises on the Income Tax amount deducted as TDS and paid to Government of India. 3. The learned Counsel took us through the facts of the case and submits that the agreement entered by the appellan .....

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liability on the gross amount charged by the service provider. He would submit that the architect has charged the gross amount that indicated in the agreement. Subsequently, learned Counsel would take us through the provision of Service Tax (Determination of Value) Rules, 2006, as per Rule 7 during the relevant period, the provision were very clear has to actual consultant charges need to be taxed. For this purpose, he relied upon the judgment of the Tribunal in the case of Commissioner of Centr .....

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r consideration is whether the amount of Income Tax discharged by the appellant, on the amount paid by them to foreign architect needs to be taxed under 'Reverse Charge Mechanism' and Service Tax liability can be fastened on the appellant or otherwise. 7. Undisputedly, the appellant has entered into an arrangement/agreement with foreign architect for receiving his services. The said agreement, also indicates an amount to be paid as consideration by the appellant to such architect; appell .....

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er, where Service Tax is chargeable on any taxable service with reference to its value, then such value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consi .....

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nclude any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. - For the purposes of this section,- (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided; (b) "money" includes any currency, cheque, promissory note, letter of credit, draft, .....

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ed and sub-section 1(i) provides for valuation wherein consideration paid in money, be the gross amount charged by the service provider. The phrase "gross amount charged" also is explained in the said Section. Reading holistically, we find that Section 67(i) very clear mandates for discharging the Service Tax liability amount which is charged by the service provider is the amount. 8. Service Tax Valuation Rules, 2006 before amendment by Notification No. 24/2012-ST, specifically Rule 7 .....

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