TMI Blog2024 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon that 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 VERSUS COMMISSIONER OF C.E., AHMEDABAD-II [ 2024 (1) TMI 984 - CESTAT 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 appellant is not liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equal to the consideration charged for the service provided or to be provided. The appellant submits that TDS paid would not be part of the consideration payable for the services rendered under Section 66A. The foreign service provider has categorically indicated the consideration payable to them. No tax was deducted from their invoice value. To comply with the provisions of Income Tax Act, 1961, they have grossed up the amount and paid their liability in terms of Section 195A of the Income Tax Act, 1961. The grossing up of amount under section 195A is only for the purpose of payment under Income Tax Act and not for computing the service tax. Accordingly, she contended that the demand of service tax confirmed on the TDS paid by them is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 relevant portion of the order is reproduced below:- 9. In our considered view, the plain reading of Section 67 with Rule 7 of Service Tax Valuation Rules, in this case in hand, Service Tax liability needs to be discharged on amounts which have been billed by the service provider. d) VSL India Private Limited ( supra ) : - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as part of the consideration. We are unable to yield to the said contentions since in such agreements where one is a non-resident and such non-resident doesn't have any PE, then it becomes the responsibility of the other party who is an Indian resident, to meet with the TDS obligation arising on account of the agreement in question. Even if such clause is not there in the agreement, still the resident cannot escape the tax liability and hence it becomes incumbent upon it to deduct tax at appropriate rate, at source, before making the payment. We find that the decisions relied upon by the appellant support our above view. In view of the above judgments, it can be seen that in the identical facts it was held that the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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