9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 505 - AT - Service Tax100% EOU - Classification of services - employee of the parent company, Nektar USA, was sent to India on a secondment to work as a full time Managing Director of the Indian company - reimbursement of salary paid to the secondee , to the parent company, Nektar USA - manpower recruitment and supply agency services or not - HELD THAT - The issue is no longer res integra as the Hon ble Supreme Court has, in the case of M/s Nissin Brake India Pvt Ltd M/S NISSIN BRAKE INDIA PVT. LTD. VERSUS CCE, JAIPUR I , dealt with similar issue - This view has been reiterated by the Chennai Bench of the Tribunal in the case of M/s Komatsu India Pvt. Ltd. Vs Commissioner of Service Tax, 2019 (9) TMI 1408 - CESTAT CHENNAI and Bangalore Bench of the Tribunal in the case of M/s Goldman Sachs Services Pvt. Ltd. Vs Commissioner of Service Tax, Bangalore 2020 (10) TMI 292 - CESTAT BANGALORE . Going by the above ratio decidendi of the Hon ble Apex Court, there are no merit in the demand raised by the revenue - the revenue is not disputing that the secondee is always under the control and supervision of the appellant and that the appellant s parent company had absolutely no obligation to pay the salary and other charges to the secondee but for remitting secondee s salary in foreign exchange based on the salary reimbursement agreement. Appeal allowed - decided in favor of appellant.
Issues:
Interpretation of whether the reimbursement of salary paid to a secondee to the parent company amounts to consideration for provision of manpower recruitment and supply agency services within the meaning of section 65(68) of the Finance Act, 1994. Analysis: The appellant, a 100% Export Oriented Unit engaged in research and development services, had a secondee from the parent company working as a full-time Managing Director. The secondee's salary was reimbursed by the appellant to the parent company under a salary reimbursement agreement. The key issue was whether this reimbursement constituted consideration for manpower recruitment and supply agency services. The Tribunal examined the statutory provisions under section 65(68) of the Finance Act, 1994, which defines manpower recruitment and supply agency services. The Tribunal noted the amendment effective from 16.05.2008 and the clarification in the master circular No. 96/7/2007-ST regarding the scope of such services. The Tribunal considered various decisions/orders, including those of different Tribunals and the Hon'ble Supreme Court, to determine the issue. Referring to the case law, the Tribunal found that the secondee was under the control and supervision of the appellant, and the parent company had no obligation to pay the secondee's salary except under the reimbursement agreement. Citing the decision in M/s Nissin Brake India Pvt Ltd, the Tribunal held that deputed employees working under control, direction, and supervision of the assessee cannot be considered a taxable service under manpower recruitment or supply agency services. The Tribunal emphasized that there was no service provider-service recipient relationship between the appellant and the overseas group companies. Based on the above analysis and precedents, the Tribunal concluded that the demand raised by the revenue had no merit. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The Tribunal emphasized that the appellant should not be liable to pay service tax under the reverse charge mechanism for the reimbursement of the secondee's salary. The judgment was pronounced on 10.12.2020, setting aside the impugned order and allowing the appeal with any consequential benefits as per law.
|
