AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 1000
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....tration No. AABCI7953G5T001 was engaged in the manufacture of Car Seat/ Car Seat Adjuster falling under sub-heading 94012000 of the First Schedule of the Central Excise Tariff Act, 1985. The appellant got deputed seconded employees from M/s Imasen Electric Industrial Company Ltd. (IEIC) and entered into "contract of employment" with each employee. From the terms and condition enumerated in the agreement, it appeared that the salary to the seconded employees were being paid by the IEIC and not by the appellant and the employees were in all capacity employees of IEIC. Further, IEIC, Japan had supplied manpower to the appellant for which payment was made in Japan on the basis of invoices raised. Though, a part of the amount was paid to the employees in India for their well being. It appeared that the appellant was required to pay Service Tax amounting to Rs. 27,48,551/- during the period from Apri1,2015 to June, 2017, as per provisions of sub-section 2 of Section 68 of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012 and Section 66C of the Act. 2.2 Accordingly, a show cause notice dated 22.03.2018 was issued, proposing therein recovery of the amount of S....
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....ir factory situated at Neemrana in India. Based on these services, they had manufactured and sold their goods and thus benefit of services accrued to them. Thus, it is simple case of providing manpower by a person located outside India (IEIC) and received by IMI in India". The appellants submit that the employees of Imasen Electrical Industrial Company Limited, in short (IEIC), Japan (Home Company) have been deputed in Imasen Manufacturing India, in short (IMI) Pvt. Ltd., India (Host Company), a company of the same group for a term of five years to work under supervision of the host company. After completion of the term, the employees would go back to Japan in their parent Company or any unit of the group company of Japan. Therefore, their remains relationship of employer and employee between the deputed staff and the IEIC (Japan). Both the companies are of the same group of companies. There is no activity of service provided by the Home Company (Japan) to Host Company (India). An employee deputed from one company to another company of the same group of companies cannot be described either a recruited person or person supplied by any agency so as to come within the ambit of taxable....
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....nd the individual and not between the individual and the person who uses the services of the individual, such cases are covered within the scope of the definition of the taxable service [Section 65(105)(K)] and since they act as supply agency, they will fall under the above taxable service. The appellants plead that in their case, this is not the case of any individual employee contractually employed by any manpower agency to another person for completion of any particular project or task but it relates to deputation of member of staff by foreign company to its group company in India for working of staff by foreign company to its group company in India for working under the Company for period of 5 years and during the deputation period, the member of staff would remain employee of the home company i.e. IEIC Ltd. (Japan) as per terms of contract of employment. In view of this, there would be relationship of employer and employee between them. It is simply a transfer of the employees on deputation from their unit of Japan to the unit in India. As the "Home Company (Japan)" is not an agency acting as supply of manpower, they would not a termed as provider of service- Manpower Recruitm....
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....fect from 01.07.2012, the appellants (home Company) are not liable to pay service tax of Rs. 27,48,551/- as recipient of service under "Manpower Supply", the demand confirmed outrightly deserves to be set aside to the extent of Rs. 27,48,551/-. f. Entrepreneurs of both Companies (TEIC & IMI) are same and both Companies are of same group companies which itself clarifies that there is neither any service provider nor service recipient because service provider and service recipient are the same and no external person is involved therewith and so question of providing taxable service to any person by any other person does not arise. g. Paragraph of CBEC's Circular No. 332/35/2006-TRU dated 01.08.2006 states that if there is no Service Provider and where there is no Service Recipient Relationship, question of providing taxable service to any person by any other person does not arise. h. Notification No. 24/97-ST dated 02.07.1997 states that Service Provider of Man Power Supply Service must raise a Bill to his Service Recipient on account of his services provided and some consideration must be there for the service whatsoever he has rendered to his service reci....
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....ation, Japan. From the same you will find that It is 100% subsidiary company of Imasen Group Companies and so from the same it also confirms that mentioned four employees are, employees of Imasen Group Companies and are transferred from Japan to India and so no services have been provided by Imasen, Japan to Imasen, India and so it attracts no Service Tax provisions also. (10) Further assessee has referred the minutes of the meeting of the Regional Advisory Committee of Central Excise (Jaipur Zone), Jaipur held on 7th May, 2014 which provides in Point No.1 the "Employee-Employer relation is established from the fact that under which Section of the Income Tax Act, 1961, the MS is being deducted by the Company on payments made to their Employees. The MS on Income under the Head of "Salaries" is deducted under Section 192 of the Income Tax Act, 1961. If the MS on payments made to their Employees by a Company has been deducted under Section 192 of the Income Tax Act, 1961, than the said payment made by the Company to their Employees are not chargeable to Service Tax as the same establishes "Employer-Employees Relationship" and thus no Service Tax is applicable under Finance Ac....
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....upreme Court in the case of M/s. HMM Ltd. Vs. CCE 1995 (76) ELT-497 (SC). 4. Personal hearing in the matter was held on 06.05.2021. Mr. Anil Kumar Saxena, Advocate & Authorised Representative appeared on behalf of the appellant and explained the case and reiterated the grounds of appeal. 5. I have gone through the facts of the case and submissions made by the appellant in their appeal memo and at the time of personal hearing. I observe that the appellant had utilised services of the seconded employees of other firm under contract of employment. Demand has been confirmed alleging that the service is classifiable under 'Manpower recruitment and supply service' and the appellant did not pay Service Tax under reverse charge mechanism. The appellant has contested the case on the ground that the only employees working in foreign group company were deputed to its group company in India, hence is not covered under service provided from outside India. I, therefore find that the issue to be decided in the appeal is whether the appellant is liable for Service Tax on the amount paid to the persons got deputed from other group company situated outside India. 6. I find that on this issu....
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....ign exchange, expatriate employees cannot be treated as employees of holding company provided to appellant company on manpower supply basis - Demand not sustainable- Section 11A of Central Excise Act, 1944. d. In the case of COMPUTER SCIENCES CORPN. INDIA PVT. LTD. Versus COMMR. OF S.T,, NOIDA [2014 (35) S.T.R. 94 (Tri. Del.)] the Hon'ble CESTAT has held that :- Demand - Manpower Recruitment or Supply Agency Service - Overseas employees were either directly employed or transferred from other group companies - In addition to deductions from salaries towards provident fund and income tax, remittances made to group companies certain social security and other benefits payable under law of foreign jurisdiction - No amount over and above the remittances to seconded employees were paid to overseas group companies - HELD : Issue squarely covered by Volkswagen India Pvt. Ltd. [2014 (34) 5.T.R. 135(Tribunal) 1 - Tribunal in said case held that global employees working as employees and employee-employer relationship present - Section 73 of Finance Act, 1994 - Section 65(68) and 65(105)(k) ibid. The Hon'ble High Court Allahabad have dismissed the appeal file....