TaxTMI 
TaxTMI 
2025 (12) TMI 1906
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.... nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned show cause notice dated 23.12.2023 bearing No.ADCOM (ENF)/SC/DCCT- 01/GST/ADJN-28/2023-24 issued by the Respondent No.3 in FORM GST DRC-01 enclosed at Annexure - A demanding IGST of Rs.85,51,00,620/- along with interest and penalty; b) Hold that the payment of salary made to the foreign national employees by the Petitioner does not attract IGST as the transaction is covered under Entry I of Schedule III of the CGST Act, 2017 and the transaction does not amount to import of manpower and recruitment supply of services from the foreign nationals to the Petitioner; c) Pass such further ....
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....als. Upon receiving the applications, evaluations are done and on such basis, the selected candidates are provided with an offer letter. Thereafter, upon acceptance of the job offer, a contract of employment is entered into between the Petitioner and the Selected candidate. This is applicable to foreign nationals as well, which lays down the details of their appointment, period of employment, salaries and benefits, etc. The specified period of employment may be extended, basis the business requirements of the Petitioner and the Visa renewal of the foreign national. Further, the foreign national may also seek employment in any other Huawei group entity situated abroad. 4. Respondent No. 3 initiated proceedings against the Petitioner seeki....
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.... for the respondents and perused the material on record. 7. A perusal of the material on record will indicate that the present case is not one of secondment of employees from other entities in the group; in fact, there exists a direct employer- employee relationship between the Petitioner and the foreign nationals/ employees and accordingly, the entire transaction is outside the ambit of GST as the transaction is covered under Entry 1 of the Schedule III of the CGST Act, 2017 which states that services provided by an employee to the employer in the course of or in relation to his employment, is neither supply of goods or supply of services for the purpose of the CGST Act, 2017. The fact that there exists a valid employer- employee relati....
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....supply in terms of Entry 1 of Schedule III of the CGST Act and the impugned SCN deserves to be quashed. 9. As rightly contended by the learned counsel for the petitioner, foreign national employees are residents of India and thus cannot be considered as non-resident taxable persons and are not non-resident taxable persons in terms of Section 2(77) of the CGST Act as alleged in the impugned show cause notice; in this context, it is relevant to state that the first condition for a person to qualify as 'non-resident taxable person' is that they should be making occasional supplies of goods and services; the term/expression 'occasional' as defined in the Cambridge dictionary means 'not happening or done often or regularly....
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....urther, the salaries received by them is accordingly subjected to the levy of income tax in terms of Section 15 of the Income-tax Act, 1961 which provides that any salary due from an employer to an employee shall be subjected to income tax. 11. Under these circumstances, it is clear that the foreign nationals employed by the Petitioner do not fulfill the criteria prescribed under Section 2(77) of the CGST Act and cannot be considered as 'Non-resident taxable persons', as alleged by the Respondents, particularly when the location of supplier is in India and consequently, the conditions under Section 2(11) of the IGST Act also not being fulfilled, thereby meaning that the subject transaction is not that of import and thus no liabil....
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....ployees during the secondment period, wherein the expats were bound by the codes of conduct and internal policies of the Indian company and it was held that in such a scenario, there is an established relationship of employer and employee between the Indian entity and the expats, which would be excluded from the ambit of GST in terms of Entry I of Schedule III of the CGST Act r/w Section 7(2)(a) of the CGST Act, 2017. 14. Further, in terms of the aforesaid Circular dated 26.06.2024, if the related domestic entity does not raise an Invoice in respect of services received from its foreign affiliate, the value of such services may be deemed to be 'Nil' and such 'Nil' value shall be treated as the open market value in terms o....