Assessable value not to include TDS unless its payment to IT Dept. on grossed-up amount is proved: CESTAT

Case Details: Scott Wilson Kirkpatrick Pvt. Ltd. Vs Commissioner of Central Tax, Bangalore - [2022] 135 taxmann.com 350 (Bangalore - CESTAT)

Judiciary and Counsel Details

• • P. Dinesha, Judicial Member and Raju, Technical Member
  • Jayaram Hiregange, Adv. for the Appellant. 
  • P. Gopakumar, Addl. Commissioner (AR) for the Respondent.

Facts of the Case

In relation to a particular service, the appellant raised an invoice to the recipient showing the description, contract amount and other details of the value of service on the front of such invoice. On the back side of the invoice, the service recipient made a remark showing that they have added income tax @20.9% to the billed amount and then deducted the same from the total billed amount.

The Department raised a demand of service tax against the appellant that he has failed to include the TDS amounts in the assessable value of the service provided by them.

The appellant argued that the recipient has paid the amount billed on the front page of the invoice and no TDS has been paid by the service recipient and no such amount is paid to the Income Tax Department. It was further argued that the net payment received by the appellant is inclusive of all taxes, therefore, no such addition of amount of TDS can be made.

CESTAT Held

The Bangalore CESTAT observed that no evidence is produced supporting the charge that the appellant has received the TDS element of the value. On the basis of invoices as an evidence, it was observed that the assesse has not billed the Income Tax payable and the billed amount is the net of tax. In view of the above, the CESTAT set aside the order of demand on the basis that the Revenue has not been able to establish that any amount has been deducted by service recipient and deposited with the Income Tax Authorities.