Seconded expatriate salary and reverse charge service tax: post-1.7.2012 liability is supported where employees remain with the foreign entity.

Salary paid to seconded expatriates was examined under the post-1.7.2012 service-tax regime, including the expanded definition of service and the employee exclusion. The analysis concludes that, where the secondment arrangement shows the personnel remain employees of the foreign entity, the Indian recipient is liable to service tax under reverse charge on the taxable service received. It further notes that earlier Tribunal decisions relied on by the taxpayer were treated by the Supreme Court as unreasoned and without precedential value, while the later Supreme Court ruling on seconded employees was considered determinative of the controversy and supportive of tax liability.

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Issues: Whether salary paid to seconded expats was liable to service tax post 1.7.2012 under reverse charge mechanism, and whether the earlier Tribunal decisions pressed into service by the appellant retained precedential value in view of the Supreme Court's later ruling.

Analysis: The relevant service definition before and after 1.7.2012 was considered, including the pre-amendment taxable service entry and the post-amendment definition of service with the employee exclusion. The opinion examined the agreement structure, secondment arrangements, foreign salary payment pattern, and the character of the expats' engagement. It was concluded that the earlier Tribunal decisions relied upon by the appellant had been held by the Supreme Court to be unreasoned and without precedential value. The later Supreme Court ruling on seconded employees was treated as covering the controversy and as supporting service tax liability on the recipient under reverse charge.

Conclusion: The issue was answered against the appellant and in favour of the Revenue, holding that the service tax demand on salary paid to seconded expats post 1.7.2012 was sustainable under reverse charge mechanism.

Final Conclusion: The opinion supports dismissal of the appeals and rejects the request for reference to a larger bench.

Ratio Decidendi: Where the factual arrangement shows seconded personnel remain employees of the foreign entity, the recipient in India is liable to service tax on the taxable service received under reverse charge, and earlier contrary Tribunal orders lacking reasoned analysis do not constitute binding precedent.

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