ITD ITD Cem Joint Venture Vs Commissioner of Central Excise (CESTAT Chandigarh)
The CESTAT Chandigarh allowed the appeal filed by M/s ITD ITD Cem Joint Venture against the demand of service tax on TDS amounts paid to the Income Tax Department under Section 195A of the Income Tax Act, 1961. The appellants had secured a works contract from Delhi Metro Rail Corporation for design and construction of civil works, including tunnel boring, and engaged foreign service providers for technical support. During audit, the Department found that the appellants had initially discharged service tax under Reverse Charge Mechanism on services received from foreign suppliers, including amounts paid towards TDS, but subsequently stopped including TDS while calculating service tax. A show-cause notice dated 02.09.2011 demanded service tax of Rs.1,15,23,010/- for 2008-09 to 2010-11. The demand, interest and penalties were confirmed by order dated 30.11.2011.
The appellants contended that TDS was a statutory payment and did not constitute consideration for the services received. They relied principally on TVS Motor Company Ltd. and other decisions, and also submitted that the extended limitation period was unavailable because the Department was aware that they had initially paid service tax on the TDS amount and subsequently adopted a different interpretation. The Department argued that Section 195A required grossing up of the payment and that the resulting TDS amount formed part of the gross consideration for service tax purposes.
