Scott Wilson Kirkpatrick (I) Pvt. Ltd. vs Commissioner Of Central Tax, Bangalore North

This appeal and a miscellaneous application have been filed by M/s. Scott Wilson Kirkpatrick (I) Pvt. Ltd. (now known as AECOM Infrastructure & Environment UK Limited).

The miscellaneous application has been filed for change of name from "M/s. Scott Wilson Kirkpatrick (I) Pvt. Ltd." to "AECOM Infrastructure & Environment UK Limited". The applicant has submitted 3 certificates of incorporation on change of name. The first one changes name from  'Scott Wilson Ltd.' to  'URS Scott Wilson Ltd.', the second one changes name from  'URS Scott Wilson Ltd.' to 'URS Infrastructure & Environment UK Limited' and the third one changes name from 'URS Infrastructure & Environment UK Limited' to  'AECOM Infrastructure & Environment UK Limited', the current name. In view of the certificates produced by the appellant, the change of name is allowed. The cause title of the appeal may be changed to 'AECOM Infrastructure & Environment UK Limited'.

Learned counsel for the appellant pointed out that demand of service tax has been raised against the appellant on the ground that the appellant failed to include the TDS amounts in the assessable value of the service provided by them. A perusal of the invoice produced by the appellant shows that on the front side of the invoice is made by the appellant which shows description, contract amount and other details of the value of service provided by the appellant and on the reverse of the invoice, the remark made by the service recipient where it has been shown that they have added income tax @20.9% to the billed amount and then deducted the same from the total billed amount and paid the actual amount billed by the appellant on the front page of the invoice. The appellant has been paid the amount billed by them on the front page of the invoice. The contention of the appellant is that they have only billed and received the same amount and the Revenue has failed to appreciate the fact that no TDS has been paid by the service recipient and no such amount is paid to the Income Tax Department. Learned counsel argued that since the net payment received by the appellant is inclusive of all taxes, no such addition of amount of TDS can be made. We find that original adjudicating authority in para 14 & 15 of the Order-in-Original clearly stated that no evidence has been produced and on that ground the demand was dropped. The said order of the original adjudicating authority was taken up for revision by the Commissioner in exercise of powers under Section 84 of the Finance Act, 1994. He argued that the Commissioner has not gone into the material evidencing TDS deducted by the service recipient. The said order-in-revision has ignored the fact that no evidence has been produced by Revenue to establish that any TDS, if so deducted was deposited with the Income Tax Department by the service recipient. The said order-in-revision also does not report the findings of the original adjudicating authority that the value for services received by the appellant and that paid by the service recipient are identical and no separate TDS has been deducted and paid to the Income Tax Department.

Learned DR reiterated the findings in the impugned order.

We find that the original adjudicating authority has observed in para 14 & 15 as follows:

"14. The contract between service provider and service receiver is the basic document to relied upon in any matter concerning the demand or recovery of service tax leviable on nay taxable service. Neither the IA paras nor SCN II refers to the contract in terms of which the impugned CER service was provided by the assessee. Apparently, the contract has not been verified at all either by the IAP concerned or the Authority who has issued the SCN II. It is observed from para 7 of the SCN that the Authority who has issued the SCN II has not herself verified any document. She has relied entirely upon the scrutiny of the documents and evidence done by the IAP. It is evident from para 7 of the SCN II that the SCN II is based entirely upon the scrutiny of invoices, ST 3 returns and financial accounts said to have been done by the IAP. It is however observed that the IA paras refer only to the invoices and there is reference to ST 3 returns and financial accounts in the IA paras. Though, the IA paras refer to invoices, the particulars of the invoices verified are not indicated or cited in the IA paras or the SCN II. Even the invoices Nos. and dates are not indicated in either of the above. To substantiate the charge of non-payment or short payment of service tax and to meet the principles of natural justice, the full details of the invoices relied upon should not only had to be cited in the SCN II, but also copies thereof furnished to the assessee. In the absence of the above, the SCN II is patently defective and infirm, in view of which, the proposals therein cannot be confirmed.

While conceding that the gross amount received by the assessee constitutes the taxable value of the impugned CER service in terms of Section 67 of the Act, it is alleged in the SCN II that the assessee have received the TDS element also from the service receiver. While the SCN II does not cite any evidence supporting the charge that the assessee did receive the TDS element of the value also, the IA paras claim that invoices reveal the above fact, without citing the details of the invoices which support the above charge or claim. The charge is wholly unsubstantiated by the Department. Since, the particulars of the invoices relied upon have not been cited either in the IA paras or the SCN II, I have no choice but to accept the invoice copies produced by the assessee as those relating to the IA paras and hence to the charge in the SCN II. It is seen from the invoice copies produced by the assessee that they have not billed the Income Tax payable by them on the service provider. The billed amount is net of taxes. It is observed from the reverse of the invoices that the service provider has on their own added and deducted the TDS amount had have credited the TDS amount to the Govt. account. Since the TDS amount has not been billed at all, the assessee's claim that they have not received the TDS amount from the service provider as a consideration for the service provided, is liable to be accepted."

From examination of invoices submitted by the appellant it is also observed that factually the observations of the original adjudicating authority are correct. The Revenue has not been able to establish any amount whatsoever has been deducted by service recipient and deposited with the Income Tax Authorities. In view of above, we do not find any merit in this impugned order. The said order is set aside and appeal is allowed.

(Dictated and pronounced in open court)