TaxTMI 
TaxTMI 
2026 (9) TMI 294
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....marized herein below: 2.2 The respondent herein inter alia, is engaged in manufacture of excisable goods viz., gear transmission system and other automotive components etc., falling under chapter heading 8708 of Central Excise Tariff Act, 1985. For the purpose of discharge of appropriate excise duty on the final products manufactured by them and for compliance with Central Excise statute, the respondent is registered with jurisdiction central excise authorities vide Registration No.AABCA4586BXM001. 2.3 During scrutiny of records maintained by the respondent, the department has observed that during the period 2007-2008 to 2010-2011, that the respondent had received engineers/employees on deputation from its foreign group company M/s Eaton Corporation, USA in terms of Seconding Agreement entered in respect of such individuals. Eaton Corporation, USA paid salaries and statutory employment benefits to such personnel outside India, for administrative convenience and recovered the same amount from the respondent assessee without any markup by raising debit notes. All employment related costs and risk associated with secondment of employees including all costs relating to hiring, re....
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....5. Learned AR for Revenue in his submission had submitted that the disputed issue is no more res integra, in view of the judgement passed by the Hon'ble Supreme Court in the case of Commissioner of Customs, Central Excise & Service Tax, Bangalore (Adjudication) Vs. Northern Operating System Private Limited - 2022 (61) G.S.T.L. 129 (S.C.). On the other hand, learned Counsel for the respondent has submitted that that respondent was of the bonafide belief that the transaction between the same entities is not exigible to service tax. Further, he submitted that the SCN was issued 19.04.2013 in respect of service tax demand for the period 2007-2008 to 2010-2011, which is beyond the normal period of limitation from the due date of filing the half-yearly return. Since the issue involved conflicting views arising on account of interpretation of complex legal provision, it would not provide any scope for invoking extended period of limitation. In this regard, he relied upon the judgement of the Hon'ble Supreme Court in the case of Continental Foundation Joint Venture Vs. Commissioner of Central Excise, Chandigarh-I - 2007 (216) E.L.T. 177 (S.C.). 6.1 In the present appeal, department had ....
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....ey are clearly qualified by the word 'wilful', preceding the words "mis-statement 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 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis-statement of fact must be wilful." In the present case, the arrangement of using the services of personnel belonging to the group entity based at USA was engaged by the respondent entity in India in certain specified sectors for enabling their manufacturing activity as per Seconding Agreement entered in each case, and in due compliance with immigration visa, tax deduction at source as per Income-Tax and other statutory compliances. Further, the expenses incurred for such secondment were on actual basis without any addition of markup/margin, to indicate the true nature of such payment being reimbursement expenditure, and did not constitute any element of service being provided by one pers....
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....ause notices [dated 23-4-2012; (for the period October, 2006-March, 2011), 19-10-2012 (for the period April, 2011 to March, 2012), 7-5-2014 & 26-11-2015 (for the period April, 2012 to September, 2014)] alleging that the assessee failed to discharge service tax under the category of "manpower recruitment or supply agency service" with regard to certain employees who were seconded to the assessee by the foreign group companies...... xxx xxx xxx xxx 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 b....
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.... employment - even during the secondment - are in accord with the policy of the overseas company, who is their employer. Upon the end of the period of secondment, they return to their original places, to await deployment or extension of secondment. xxx xxx xxx xxx 65. It is held, for the foregoing reasons, that the assessee was the service recipient for service (of manpower recruitment and supply services) by the overseas entity, in regard to the employees it seconded to the assessee, for the duration of their deputation or secondment. Furthermore, in view of the above discussion, the invocation of the extended period of limitation in both cases, by the revenue is not tenable. 66. In light of the above, the revenue's appeals succeed in part; the assessee is liable to pay service tax for the periods spelt out in the SCNs. However, the invocation of the extended period of limitation, in this court's opinion, was unjustified and unreasonable. Resultantly, the assessee is held liable to discharge its service tax liability for the normal period or periods, covered by the four SCNs issued to it. The consequential demands therefore, shall be recovered fr....
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.... is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to section 11A. Misstatement or suppression of fact must be wilful." 63. This decision was followed in Uniworth Textiles v. Commissioner of Central Excise [2013] 9 SCC 753, where it was observed that "(t)he conclusion that mere non- payment of duties is equivalent to collusion or wilful misstatement or suppression of facts" is "untenable". This view was also followed in Escorts v. Commissioner of Central Excise [2015] 9 SCC 109 Commissioner of Customs v. Magus Metals [2017] 16 SCC 491 and other judgments. 64. The fact that the CESTAT in the present case, relied upon two of its previous orders, which were pressed into service, and also that in the present case itself, the revenue discharged the later two show cause notices, evidences that the view held by the assessee about its liability was neither untenable, nor mala fide. This is sufficient to turn down the revenue's contention about the existence of "wilful suppression" of facts, or deliberate misstatement. For these reasons, the r....