No service tax on Income Tax TDS portion paid by recipient

Last updated: 13 September 2021

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The Tribunal ruled that the portion of payment deducted as Income Tax TDS by the service recipient cannot be included when calculating Service Tax liability under the reverse charge mechanism. This is because the TDS amount is a statutory deduction and not part of the consideration for the services rendered. The ruling clarifies that Service Tax is only applicable on the actual service charges paid to the provider.

Court :
CESTAT, Chennai

Brief :
In M/s. T.V.S. Motor Company Limited v. The Commissioner of Central Excise & Service Tax [Service Tax Appeal No. 219 of 2009 merged with Service Tax Appeal No. 41077 of 2013 dated August 31, 2021], M/S. TVS Motor Company ("the Petitioner") had appealed against the Tribunal’s Final Order No. 652 of 2012 dated June 13, 2012. The Petitioner had appealed in the Supreme Court against the order dated June 13, 2012, and the Court vide order 2015 (37) S.T.R. J177 (S.C.) disposed of the matter. The Petitioner then again appealed in the Tribunal vide Service Tax Appeal No. 41077 of 2013 and considering the connection between the two appeals, the Tribunal had passed a common Final Order Nos. 42277-42278 / 2021.

Citation :
Final Order Nos. 42277-42278 / 2021

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1 Year PLAN

1999

(Excl. of GST ₹359)

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3499

(Excl. of GST ₹629)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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