TaxTMI 
TaxTMI 
2026 (4) TMI 1589
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....uitment or Supply Agency Service' and hence, liable to service tax. Accordingly confirmed a demand of Rs.1,76,79,723/- along with interest and imposed penalties under Section 77 and 78 of the Finance Act, 1994. Aggrieved by this order, the appellant is in appeal before us. 3. The Learned Sr. Counsel submits that the appellant is a 100% Export Oriented Unit (EOU) registered with Software Technology Parks of India (STPI) for exporting Information Technology Services (ITS). During the disputed period, it is submitted that the appellant had entered into Salary Cost Reimbursement Agreement with its overseas counterpart ARM Ltd. in England intending to employ certain employees from its foreign counterparts for the purpose of software development and commercial operations. Under this agreement, specific employees of the overseas entity at the request of the appellant were seconded to the appellant's Indian operations for software development and commercial activities. The appellant paid the entire salary of such seconded employees with other benefits such as PF allowance, special allowances etc. while the foreign entity disperses the other part of the salary. It is stated that for admi....
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.....10.2010. 6. The Hon'ble Supreme Court in the case of Northern Operating System Pvt. Ltd. (supra) held as follows: "33. The issue which this Court has to decide is whether the overseas group company or companies, with whom the assessee has entered into agreements, provide it manpower services, for the discharge of its functions through seconded employees. 34. The contemporary global economy has witnessed rapid cross-border arrangements for which dynamic mobile workforces are optimal. To leverage talent within a transnational group, employees are frequently seconded to affiliated or group companies based on business considerations. In a typical secondment arrangement, employees of overseas entities are deputed to the host entity (Indian associate) on the latter's request to meet its specific needs and requirements of the Indian associate. During the arrangement, the secondees work under the control and supervision of the Indian company and in relation to the work responsibilities of the Indian affiliate. Social security laws of the home country (of the secondees) and business considerations result in payroll retention and salary payment by the foreign entity, wh....
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.... (a) person provided service (b) directly or indirectly, ( c) in any manner for recruitment or supply of manpower (d) temporarily or otherwise. After the amendment, all activities carried out by one person for another, for a consideration, are deemed services, except certain specified excluded categories. One of the excluded category is the provision of service by an employee to the employer in relation to his employment. 47. xxxx 48. The task of this Court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided - in that context - by the overseas group company to the assessee. 49. A co-joint reading of the documents on record show that : (i) Attachment 1 to the service agreement ensures that the overseas group company assigns, inter alia, 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%....
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....ad to ultimately bear the burden. There is nothing unusual in this arrangement, given that the seconded employees were performing the tasks relating to the assessee's activities and not in relation to the overseas employer. To put it differently, it would be unnatural to expect the overseas employer to not seek reimbursement of the employees' salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business. 51. xxxx 52. A vital fact which is to be considered in this case, is that the nature of the overseas group companies business appears to be to secure contracts, which can be performed by its highly trained and skilled personnel. This business is providing certain specialized services (back office, IT, bank related services, inventories, etc.). Taking advantage of the globalized economy, and having regard to locational advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimize the economic edge (be it manpower or other resources availability) to perform the specific tasks given it, by the overseas compa....
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....ompany 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. 56. This Court, upon a review of the previous judgment in Sushilaben Indravadan (supra) held that there no one single determinative test, but that what is applicable is "a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight." 57. Taking a cue from the above observations, while the control (over performance of the ....
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....s agreement is from April 01 2005. Now This Agreement Witnesseth and it is hereby agreed by and between the parties as follows: 1. Interpretation In this Agreement unless the context otherwise requires: a) Words denoting the singular number shall include the plural and vice versa; b) Words denoting any gender shall include all genders; c) Where a word or phrase is defined, other parts of speech and grammatical forms of that word or phrase shall have the appropriate corresponding meaning; d) Words denoting natural persons shall include corporation and vice-versa; e) Headings are for convenience only and shall not affect interpretation; f) Reference to any party in this agreement shall include the party's successors and permitted assigns; g) Any schedule to this agreement is incorporated herein forms part of this agreement; and h) References to "$" or to "USD" shall be taken as referring to amounts of currency of the United States Dollar. 2. Assignment & Remuneration 2.1 The employees as required and specified by the Assignee for its operations in India and intimated t....
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..... Confidentiality All information exchanged between the parties under this agreement, all information relating to the terms and conditions of this agreement or to any of the activities contemplated by this agreement is confidential to them, their employees, legal advisers and other consultants and may not be disclosed to any other person except: a) To the advisor of either party, b) For the purposes of this agreement or otherwise with the consent of the party who supplied the information; c) If the information is, on the date this agreement is entered into, lawfully in the possession of the recipient of the information through sources other than the party who supplied the information; d) If required by law or a stock exchange; e) In connection with legal proceedings relating to this agreement; or f) If the information is generally and publicly available. 11. Representations and Warranties Assignor and Assignee each represents and warrants to the other that a) It has the capacity to enter into and perform this agreement and all transactions and undertakings contemplated herein and that all corp....
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.... 1. We are happy to confirm your secondment to ARM Embedded Technologies Private Limited. (hereinafter referred to as 'ARM' or 'the Company). designation is Senior Engineer and you will be based in the Bangalore Office. Your duties will be as follows:- * Verification Engineer, SMMU: a. Contribute in Testplan/Verification Methodology documentation b. Contribute in building System Verilog Testbench c. Contribute in building Scoreboard functionality d. Contribute in building Protocol Checkers/Monitors and Bus Functional Models e. Contribute in developing random/directed test cases f. Contribute in Debug and fixing of the Verification Environment/test Issues g. Contribute to providing inputs to user facing documentation, * Verification Assessor, Hugo a. Review Hugo Verification Methodology and implementation and provide inputs where required. 2. Please note that your term of employment (secondment) with the Company commences from 01 August 2010 and is valid for a period of 11 months initially, with the option to extend the assignment. 3. You will be req....
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....that this will be a mutually beneficial relationship. Annexure-I Salary/Allowances/Deductions Summary While on your international assignment, you will receive assignment-related allowances, deductions and other benefits as per the international assignment policy. The employer will review the salary, allowances and deductions per the schedule indicated herein and will adjust accordingly (up or down) based on the data review. An overview of your current (as of the start date of your assignment) allowances is below. On-Assignment Salary/Allowances/Deductions * Home-Country Salary - entitled to a salary of GBP 34,250/ (annual equivalent to INR 24,23,970 and USD 51,855 based on exchange rate as at 03 July 2010) * Your salary as per your discretion may be paid into the bank account designated by you in your home country. * Host-Country Housing Allowance * You will be entitles to a House Rent Allowance of INR Rs.21,500 per month which will be paid to you by ARM, India * Host-Country Utilities Allowance * You will be entitled to a Utilities Allowance of INR Rs. 10,000 per month * Host-Country....