Case Law Details
Case Name : T.V.S. Motor Company Ltd. Vs Commissioner of Central Excise, Chennai - III (CESTAT Chennai)
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CESTAT, CHENNAI BENCH
T.V.S. Motor Company Ltd.
versus
Commissioner of Central Excise, Chennai – III
FINAL ORDER NO. 652 OF 2012
JUNE 13, 2012
ORDER
D.N. Panda, Judicial Member
Pursuant to Miscellaneous Order No.258/2011 passed by the Bench on 6.6.2011 against Revenue’s application dated 30.11.2009 for early hearing, this matter came up for hearing today after 3 (Three) years of passing Stay order vide No.411/2009 dt. 18.5.2009 granting full waiver of predeposit to the appellant against service tax demand of Rs. 1,65,53,563/- followed by levy of equal amount of pen...
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In my persoanl opinion, the judgment is based more on interpretation of the contract between appealant and service provider than interpretation of law on Income Tax and Service Tax. As the case starts, the fact indicates that the appealant representative was not present and the case was unattended.Indian Income Tax laws provide recovery of TDS on the sum credited to the contractor if falls under specific provisions of TDS sections. But payment of income tax on behalf of the service provider by service receiver out of a contract is obviously not the service value exigible to tax.It may so happen that the Europe based service provider on whose behalf TDS is deposited, may not be assessable to any Income Tax and the refund on this account may flow directly to the Appealant. The decision, with due honour to ld. judges is anti industry.
In my opinion this judgement had failed to understand and appreciate the factual posision and hence not a good one for the industry. The consideration should be passed to the service provider either directly or indirectly. It might include the expenditure which is consumed by the service provider while providing the service such as travel, stay etc. However at no streach of immagination it can include tax which the service receiver has to incurr for availing the service.
Normally when the tax is withheld on the payments made to foreingh servie provider the certificate for deduction is issued to the service provider. The service provider will also get the credit for the tax as per the provisions of DTAA. In the case of grossing up the certificate for withholding tax will not be issued to the service provider. Hence at no streach of imagination it shall form part of the consideration for the service rendered.
Already industry is incurring a minimum of 10% to 30% of witholding tax and 10.30% of servie tax on the transaction. This would only aggrevate the current situation.