Order Date – 31 January 2024

Parties: M/s. International Flavours & Fragrances India Pvt. Ltd. Vs Commissioner of GST & Central Excise

Facts –

• The Appellant, M/s. International Flavours & Fragrances India Pvt. Ltd., has imported services like testing, auditing, consultancy etc. from outside India against a consideration.
• Show Cause Notice was issued demanding differential service tax on the TDS paid by them to the Income Tax Department over and above the bill amount and the demand raised was confirmed.

Issue –

• Whether the service tax is payable on TDS portion of the foreign currency remittance?

Order –

• The Tribunal observed that the TDS paid by them was to comply with the provisions of the Income Tax Act. 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, the Tribunal observed that service tax is not payable on the TDS paid by the appellant on behalf of the foreign service provider.
• Further 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. Vs. CCE, Ahmedabad – II reported in 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.
• Accordingly, held that the demand confirmed in the impugned order is not sustainable and set aside the same. Hence the appeal is allowed.