TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 183
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....es, "management or business consultant" services and "telecommunication services" from outside India. 2. Dell India Private Limited [Dell India] is a company incorporated under the Companies Act, 1956 with its registered office in Bangalore. It is engaged, inter-alia, in the business of import and sale of storage units, servers, notebooks and peripherals such as projector and monitors. In addition to it, it also provides various other services such as "erection, commissioning or installation" services, "management maintenance or repair" services, "information technology software" services and "business auxiliary service". 3. Dell International and Dell India shall hereinafter be referred to as the appellant. 4. During the course of rendering the aforementioned services during the period from 2006 to 2010, the employees of group companies of the appellant were deputed to India and salaries/expenses of such deputed employees were paid by the group companies and same was reimbursed by raising bills/invoices on the respective group companies. The total amount that was reimbursed to the group companies on account of the payment of salaries was grouped under "salary cost" in the 'Prof....
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....293,706 31.07.22 7. ST/21504/2014 04.12.2012 30.01.2014 April 2011 to March 2012 3,812,210 __ 3,812,210 31.07.22 112,973,813 38,875,210 8. The issue involved in all the aforesaid seven appeals is as to whether the group companies who have seconded their employees to the appellant would result in "manpower recruitment or supply agency" services taxable at the hands of the appellant under the reverse charge mechanism placed under section 66A of the Finance Act. 9. This issue has been considered and decided by the Supreme Court in Commissioner of Customs, Central Excise & Service Tax-Bangalore (Adjudication) ETC. v/s M/s Northern Operating System Pvt. Ltd. [Civil Appeal No. 2289-2293 of 2021 decided on 19.05.2022]. In this case, the revenue had issued four show cause notices alleging that the assessee failed to discharge service tax under the category of "manpower recruitment or supply agency" service with regard to employees who were seconded to the assessee by the foreign group companies. The first two of these notices also invoked the proviso to section 73(1) read with section 66A of the Finance Act, proposing to....
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...., certain tasks to the assessee, including back office operations of a certain kind, in relation to its activities, or that of other group companies or entities; (ii) The assessee is paid a mark up of 15% of the overall expenditure it incurs, by the overseas company (clause 2, read with attachment 1 of the Service Agreement); (iii) By the Secondment Agreement, the parties agree that the overseas 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 o....
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.... working in India. The monthly housing allowance in the specific case was Rs. 366,700/-. In addition, an annual utility allowance of Rs. 3,97,500/- is also assured. These are substantial amounts, and could have been only by resorting to a standardized policy, of the overseas employer. 55. The overall effect of the four agreements entered into by the assessee, at various periods, with NTS or other group companies, clearly points to the fact that the overseas company has a pool of highly skilled employees, who are entitled to a certain salary structure- as well as social security benefits. These employees, having regard to their expertise and specialization, are seconded (a term synonymous with the commonly used term in India, deputation) to the concerned local municipal entity (in this case, the assessee) for the use of their skills. Upon the cessation of the term of secondment, they return to their overseas employer, or are deployed on some other secondment. 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 fa....
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....ow cause notice, the Supreme Court in Northern Operating System did not agree with the contention of the Department that it was correctly invoked and it was held that the Department was not justified in invoking the extended period of limitation. The relevant paragraphs of the judgment are as follows:- "62. The revenue's argument that the assessee had indulged in wilful suppression, in this court's considered view, is insubstantial. The view of a previous three judge ruling, in Cosmic Dye Chemical v. Collector of Central Excise [(1995) 6 SCC 117] - in the context of section 11A of the Central Excise Act, 1944, which is in identical terms with section 73 of the Finance Act, 1994 was that: "Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "misstatement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or rules" are again qualified by the immediately following words "w....
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.... of the Finance Act for the normal period. 16. Regarding the imposition of interest under section 75 of the Finance Act is concerned, it is seen that in Northern Operating Systems, the Commissioner had confirmed the demand made for service tax with interest and penalty. The Supreme Court, in paragraph 67 of the judgment, restored the order passed by the Commissioner except to the extent that it sought to recover an amount for the extended period of limitation. Thus, the Supreme Court confirmed the imposition of interest under section 75 of the Finance Act. 17. Learned counsel for the appellant, however, placed reliance upon the decision of the Supreme Court in Commissioner of Central Excise and Service Tax, Rohtak v/s Merino Panel Product Ltd. [2022 (12) TMI 453- Supreme Court] to contend that no interest should have been levied under section 75 of the Finance Act. 18. It would be seen from the aforesaid decision of the Supreme Court in Merino Panel Products that the imposition of penalty had been set aside only for the reason that the revenue appeared to be unclear on the correct method to be adopted for valuation of the goods. 19. Section 75 of the Finance Act deals with inte....