Levy of service tax under the reverse charge mechanism for ...

Overseas manpower supply: Service tax applicable under reverse charge on salary reimbursement.

Case Laws     Service Tax

October 18, 2024

Levy of service tax under the reverse charge mechanism for manpower services imported from an overseas group company. The agreement involved secondment of employees from the overseas company to the Indian company, with the Indian company reimbursing the salary costs of the expatriates, which constituted consideration for receipt of manpower supply services. The Tribunal, relying on the Supreme Court's decision in Northern Operating Systems, held that the overseas company provided manpower services to the Indian company, and the reimbursement of salary costs by the Indian company was the consideration for such services. Consequently, the Tribunal dismissed the appeal and upheld the Commissioner's decision to levy service tax under the reverse charge mechanism.

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