TMI Blog2024 (1) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Section 67 that it contemplates how the valuation of taxable service for charging Service Tax needs to be arrived and sub-section 1(1) 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, it is found that Section 67(1) very clear mandates for discharging the Service Tax liability amount which is charged by the service provider is the amount. It can be seen that in M/S. HINDUSTAN OIL EXPLORATION CO. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2019 (2) TMI 1248 - CESTAT CHENNAI] in the identical facts it was held that the TDS deposited which is over and above the invoice value cannot be charged to service tax. Accordingly, the demand in the present case is not sustainable, hence the impugned order is set aside - appeal allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Shri Amit Laddha , Advocatet for the Appellant Shri Anoop Kumar Mudvel , Superintendent ( AR ) , for the Respondent ORDER RAMESH NAIR The issue involved in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of SEZ Act would prevail. This view gets strengthen with the judgment of Hon'ble Andhra Pradesh High Court in case of GMR Aerospace Engineering Ltd. Vs. Union of India reported at 2019 (31) GSTL 596 (A.P.) duly affirmed by Hon'ble Supreme Court vide Judgment dated 26.07.2019 passed in SLP (C) Diary No. 22140/2019. 2.3 He further submits that in present case the Barges which taken on the rent were exclusively used for the authorized operations of SEZ carried out by the Appellant. In terms of Section 26 of Special Economic Zone Act, 2005 read with Notification No.12/2013-ST dated 01.07.2013, as amended, the Appellant was entitled for refund of service tax paid on services used for the Authorized operation. Since both barges were exclusively used for the authorized operation, the Appellant was entitled for refund of service tax on such services and accordingly, even otherwise the entire situation is revenue neutral in nature. He placed reliance upon the following case laws: Chiripal Polyfilms Ltd. Vs. Commr. of C. EX. S.T., Vadodara-1 2022 (67) GS.T.L. 454 (Tri-Ahmd.) Commissioner of CUS C. EX. Vs. Textile Corpn. Marathwada Ltd. 2008 (231) ELT. 195 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave paid the amount towards TDS to their service provider. In this case, the TDS amount cannot be charged to service tax. This issue has been considered in various judgments as follows:- a) Magarpatta Township Dev. Construction Co. Ltd (Supra):- 7. Undisputedly, the appellant has entered into an arrangements/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 appellant has discharged the Service Tax liability on such an amount paid to the appellant is required to pay the Income Tax on such amount, which he has done so from his own pocket. On this factual matrix it requires to architect. As per provision of Income Tax Act be seen whether the relevant provision of Section 67 of the Finance Act, 1994 gets attracted We reproduce the said Section;- Valuation of taxable services for charging Service Tax. 67. (1) Subject to the provisions of this Chapter, where Service Tar 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 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant Rule is reproduced 7. 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. (2) Notwithstanding anything contained in sub-rule (1), the value of taxable services specified in clause (1) of rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, as are partly performed in India, be the total consideration paid by the recipient for such services including the value of service partly performed outside India. It can be seen from the above reproduced Rule that for the purpose of discharge of Service Tax for the service provided from outside India, the value is equal to the actual consideration charged for the services provided or to be provided. In the case in hand, we specifically asked for the invoice/bill raised by the service provider and on perusal of the same, we find that appellant had discharged the consideration as raised in the said invoice/bill. There is nothing on record that indicates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section contemplates discharge of Service Tax lability 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, Leamed Counsel woukt take us through the provision of Service Tax (Determination of Value) Rules, 2006 as per Rule 7 during the relevant period, the provisions were very clear as 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 Central Excise Raigad v. Jawaharlal Nehru Port Trust P. Ltd-2015 (40) STR. 533 (Tr.-Mumbai) The Tribunal in the above decision had set aside the demand. Following the same, the demand under this category requires to be set aside, which we hereby do. c) Indian Additives Ltd. (supra) :- 5. The issue to be decided is whether the levy of service tax on the TDS portion borne by the appellant is legal and proper. The issue stands decided by the order of the Tribunal in the appellant's own case for a different period. The Tribunal had relied upon the decision in the case of Magarpatta Township Development and Construction Co. Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. Further, under said section, such sum alone is taxable which has the character of 'income'. 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 amount as agreed towards value/consideration and the expenditure towards TDS are met by the assessee. 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. There is an argument a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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