Service Tax Cannot Be Levied on TDS Paid to Govt on Behalf of Foreign Service Provider: CESTAT

The CESTAT has ruled that service tax cannot be levied on TDS paid to the government on behalf of a foreign service provider. The tribunal clarified that the TDS amount, which is deducted and deposited with the government, does not constitute a part of the gross amount charged for the service. Therefore, it cannot be included in the taxable value for service tax purposes. This decision provides significant relief to taxpayers, as it prevents the double taxation of the same amount—once as TDS and again as a component of the service value for calculating service tax. The ruling reinforces the principle that taxes cannot be levied on amounts that are not part of the consideration for a service.