2017 (10) TMI 903

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....ed in relation to sale of cars in India by BMW AG, Germany; (iii) Non payment of service tax on charges received from BMW,AG Germany on account of services rendered in relation to international purchasing office in India. 2. Four show cause notices were issued covering the period 2006-07 to September, 2011. The show cause notices were adjudicated resulting in confirmation of demand of service tax Rs. 4,67,42,480/- on import of manpower service under reverse charge mechanism, Rs. 16,65,550/- in respect of commission service and Rs. 1,74,76,381 in respect of IPO service. Issue No.(i) 3. Ld.Advocate for the appellant submits that there is an agreement between BMW India and BMW, AG Germany. Under the said agreement, the BMW, AG Germany is assigning certain number of employees to the BMW India. The employees are under direct control and supervision of BMW India. The International Assignment Agreement provides that the concerned employees are released from working for the transferring unit such as BMW AG for the time period they are employees of the BMW India. He also submitted that they are paying income-tax in India and their provident fund is also deducted in India. He also took....

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....edings in relation to these services for subsequent period. 6. Learned AR reiterated the findings in the order of the adjudicating authority. 7. Heard the parties and perused the records. 8. In this appeal, there are demands have been raised on 3 issues: Issue No.(i) Levy of service tax on salaries and perquisites of the employees and expats under manpower recruitment supply agency service. It has been alleged in the show cause notice that BMW had made remittances in foreign currencies to the BMW, AG Germany for the salaries of the employees/expats deputed to BMW India on International Assignment contract basis. It has been alleged that BMW, AG was supplying the employees to BMW, India. Hence, the services provided by BMW, AG to BMW India fall under taxable services manpower recruitment supply agency. 9. We have gone through the terms of agreements dated 17.11.2008. It is seen that as per agreement, the employees have been deputed by BMW, AG and they are under direct control and supervision of BMW India. The employees are paying income-tax in India and making EF contribution in India. We also find that the employees remained on the payroll of BMW India and there is employment....

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....ign company, it cannot be said that the foreign/holding company rendered supply of manpower or labour to the appellant. He also placed reliance on the decision of the Tribunal in the case of ITC Ltd. v. Commissioner of Service Tax, New Delhi - 2012-TIOL-855-CESTAT-DEL = 2013 (29) S.T.R. 387 (Tribunal) and Paramount Communication Ltd. v. Commissioner of Central Excise, Jaipur - 2013-TIOL-37-CESTAT-DEL = 2013 (29) S.T.R. 317 (Tribunal) = 2013 (287) E.L.T. 213 (Tribunal) in support of his contentions." 11. The matter is also covered by the judgement of the Hon'ble Gujarat High Court in the case of Arvind Mills Ltd. (supra) and of the Hon'ble Bombay High Court in the case of Krohne Marshall Pvt.Ltd. (supra). The appeal filed by the department against the High Court order in the case of Krohne Marshall P. Ltd. Vs CCE, Pune (supra) was dismissed by the Supreme Court as reported at 2016 (44) STR J153 (SC). 12. In view of the above judgements, and taking into account that BMW AG is not a manpower supplier, we find that the demand on the issue is not sustainable and is liable to be set aside. Issue No. (ii) The commission received on account of rendering service in relation to the sale ....

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....nder Section 65(105)(zzzq) and defined under Section 65(104c) of the Act, fails and has no merit at all." 13.1 In so far as business auxiliary service is concerned, the appellant have contended that the above issue is no longer res integra and is covered by the judgements of this Tribunal in the case of Microsoft Corporation India Pvt.Ltd. (supra) and in the case of Paul Merchants Limited (supra) and the decision of the Tribunal in the case of M/s.GAP International Sourcing India Pvt.Ltd. (supra). In the case of M/s Microsoft Corporation India Pvt. Limited (supra), wherein the Microsoft Corporation India Pvt. Ltd. was providing Market Promotion, Technical Support and Marketing of Microsoft products to Mircosoft Operation Pvt. Ltd. Singapore, this Tribunal took the following view in the majority order:- "51. Even otherwise also, I find that the disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activitie....