2020 (4) TMI 274 - AT - Service Tax

Demand of service tax - failure to pay service tax on the amount of reimbursement of payroll cost for the expatriate employees deputed from Deloitte Touche Overseas Services LLC USA during the relevant period - CENVAT Credit on input services - Business Auxiliary Services. Levy of Service tax - reimbursement of payroll cost of expatriate employees deputed from overseas - HELD THAT - This Tribunal to ascertain the employer employee relation remanded the matter to the adjudicating authority in DELOITTE TAX SERVICES INDIA PVT LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE HYDERABAD - IV 2019 (11) TMI 1261 - CESTAT HYDERABAD . Following the said precedent, the present appeals are also remanded on the said issue to the adjudicating authority to ascertain the said facts accordingly. CENVAT credit - input services namely business auxiliary services - HELD THAT - Since we are remanding the appeals on the first issue to the adjudicating Commissioner, in our view it is appropriate also to remand the issue of admissibility of CENVAT Credit to the adjudicating Commissioner to examine its admissibility from all aspects including the principle of law applicable to the facts of the case. Appeal allowed by way of remand.

Summary

Issues involved: Appeal against orders-in-original passed by Commissioner of Customs, Central Excise and Service Tax, Hyderabad regarding service tax on reimbursement of payroll cost for expatriate employees and denial of CENVAT credit on input services.

Analysis:

1. Levy of Service Tax on Reimbursement of Payroll Cost for Expatriate Employees:
The appellant contended that the issue had been decided in their favor by the department for subsequent periods, referencing a Tribunal order remanding the matter to ascertain the employer-employee relationship with the overseas company. The learned advocate argued that the present demand should be set aside accordingly. On the contrary, the Revenue argued for remanding the case to ascertain the facts in light of the Tribunal's previous order. The Tribunal, considering the precedent, remanded the appeals to the adjudicating authority to ascertain the employer-employee relationship, keeping all issues open for further examination.

2. Admissibility of CENVAT Credit on Business Auxiliary Services:
The appellant cited a Commissioner (Appeals) order for a subsequent period classifying their services as business auxiliary services, allowing CENVAT credit. The Revenue, however, referred to a High Court judgment classifying the services as business auxiliary services and argued that subsequent orders allowing CENVAT credit did not consider this judgment. The Tribunal noted that the adjudicating authority had not considered the High Court judgment and decided to remand the issue of admissibility of CENVAT credit to the adjudicating Commissioner for a comprehensive examination, including the applicable legal principles. The appeals were allowed by way of remand, with a direction to decide them within four months from the date of communication of the order.