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TMI Blog2024 (5) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... to the present case. HELD THAT:- In the sample Secondment Agreement and the Dispatch Agreement between the respondent and FFECJ reveals that these agreements terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. In the present case also, the respondent was in need of personnel for facilitating the business operations in India and the overseas company which has such personnel who possesses the requisite qualification and skilled employees itself desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel. The deputed personnel while under employment with the respondent was not in any way subjected to any kind of instruction or control or direction or supervision of the overseas company and they would report only to respondent s management - The remuneration to be paid by the respondent to dispatched personnel as laid down at Article 5 comprising of Monthly salary in India; Monthly Salary in Japan; Bonus in Japan and any other allowance paid / cost incurred for the dispatched personnel during the employment period. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Construction Co. Ltd., Japan (FFECJ, for short) for deputation / assignment of personnel having qualification and skill for facilitating the business operations of the respondent in India; also entered into Dispatch Agreement and Secondment Agreement for supply of qualified and skilled personnel. 2.2. On audit of their records by the Department, it is alleged that the services received by the respondent during the said period is taxable and consequently show-cause notice dated 10.06.2017 was issued to them demanding service tax amounting to Rs.69,06,616/- for the period April 2013 to March 2015 with interest and penalty. On adjudication, the said demand was confirmed with interest and penalty. Aggrieved by the said order, the respondent preferred an appeal before the learned Commissioner(Appeals) who allowed their appeal by setting aside the order of the adjudicating authority. Hence the Revenue is in appeal. 3.1. At the outset, the learned AR for the Revenue reiterating the grounds of appeal has submitted that the learned Commissioner(Appeals) has not considered the main issue that assigned employees are deputed by FFECJ which goes without saying that such employees do not ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords. 6. The short questions involved in the present appeal are : (i) whether the principle of law laid down by the Hon'ble Supreme Court on applicability of service tax on receiving services from the overseas company FFECJ through Dispatch Agreement and Secondment Agreement in deployment of qualified and skilled employees during the said period and (ii) whether extended period of limitation could be invoked in the circumstances of the case. 7. The Revenue's argument is that the facts of the present case are similar to the facts decided by the Hon'ble Supreme Court in Northern Operating Systems Pvt. Ltd.'s case (supra); hence applying the ratio laid down in the said case, the service tax demand confirmed by the adjudicating authority be restored. On the other hand, the respondent argued that the Dispatch Agreement and Secondment Agreement are different in the present case to the one decided by the Hon'ble Supreme Court; hence ratio of the Supreme Court judgment is not applicable to the present case. 8. Reading the judgment of the Hon'ble Supreme Court, it is clear that in para 3, the nature and content of the agreement has been narrated which reads as follows:- 3. The nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pairs.' 9.1. In the sample Secondment Agreement and the Dispatch Agreement between the respondent and FFECJ reveals that these agreements' terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon'ble Supreme Court in Northern Operating Systems Pvt. Ltd. (supra). In the present case also, the respondent was in need of personnel for facilitating the business operations in India and the overseas company which has such personnel who possesses the requisite qualification and skilled employees itself desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel. The deputed personnel while under employment with the respondent was not in any way subjected to any kind of instruction or control or direction or supervision of the overseas company and they would report only to respondent's management. They shall function solely under the control, direction and supervision of respondent and in accordance with the policy, rules, guidelines applicable to the employees of the respondent. The respondent shall have the sole right to take punitive steps against misconduct, negligence, fraud or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas employee is temporarily loaned to the assessee (Article I read with the Schedule); (iv) During the period of secondment, the assessee has control over the employee, i.e. it can require the seconded employee to return, and likewise, the employee has the discretion to terminate the relationship (Article II); (v) The overseas employer (group company) pays the seconded employee, which is reimbursed to the overseas company, by the assessee (Article III); (vi) The assessee is responsible for the work of the seconded employee, i.e., the overseas employer, during the secondment period, is absolved of any liability for the job or work of its seconded employees (Article VII); (vii) The secondment is for a specified duration, and the employment with the assessee ceases upon the expiration of that period (Article II of the secondment agreement and the "Duration" clause in the letter of understanding with the seconded employee); (viii) The letter of understanding issued to the seconded employee specifies that the tenure with the assessee is an assignment (in one place, the term used is "At its conclusion, repatriation will be in accordance with the Global Mobility Repatriation Pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimize the economic edge (be it manpower or other resources availability) to perform the specific tasks given it, by the overseas company. As part of this agreement, a secondment contract is entered into, whereby the overseas company's employee or employees, possessing the specific required skill, are deployed for the duration the task is estimated to be completed in. This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the purpose of completion of the assessee's job, amounts to manpower supply. 53. Facially, or to put it differently, for all appearances, the seconded employee, for the duration of her or his secondment, is under the control of the assessee, and works under its direction. Yet, the fact remains that they are on the pay rolls of their overseas employer. What is left unsaid - and perhaps crucial, is that this is a legal requirement, since they are entitled to social security benefits i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight." 57. Taking a cue from the above observations, while the control (over performance of the seconded employees' work) and the right to ask them to return, if their functioning is not as is desired, is with the assessee, the fact remains that their overseas employer in relation to its business, deploys them to the assessee, on secondment. Secondly, the overseas employer - for whatever reason, pays them their salaries. Their terms of employment - even during the secondment - are in accord with the policy of the overseas company, who is their employer. Upon the end of the period of secondment, they return to their original places, to await deployment or extension of secondment. 58. One of the arguments of the assessee was that arguendo, the arrangement was "manpower supply" (under the unamended Act) and a service [(not falling within exclusion (b) to Section 65(44)] yet it was not required to pay any consideration to the overseas group company. The mere payment in the form of remittances or amounts, by whatever manner, eith ..... X X X X Extracts X X X X X X X X Extracts X X X X
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