TMI Blog2017 (12) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in all aspects of the deputation of its own ‘suspended’ employee - service tax is rightly levied. Extended period of limitation - revenue neutrality - Held that: - If the situation is revenue neutral, in the sense the tax paid by appellant themselves, in full, on reverse charge basis then the intention to evade cannot be alleged. The fact regarding the revenue neutrality needs verification. Appeal dismissed on the point of merits - the matter is remanded to original adjudicating authority to give findings on the issue of revenue neutrality and it’s impact on limitation and penalties. - ST/85628 & 85629/16 - A/90857-90858/17/STB - Dated:- 16-11-2017 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri. S Narayanan, Advocate for Appellant Shri. M.K. Sarangi, Addl. Comm. (AR), for Respondent ORDER Per: Raju 1. These appeals have been filed by M/s.INA Bearings India Pvt. Ltd. against demand of service tax under head of Manpower Recruitment and Supply Agency service. 2. Ld. Counsel for the appellant argued that they had paid certain amounts in foreign currency to their associated company, namely, M/s.Schaeffler Group s, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any who sent you on your assignment in accordance with the attachment entitled Assignment Salary for this agreement. iv) Assignment Conditions: The regulations in the foreign assignment guideline for the Schaeffler Group version 4/2008 apply for your assignment. v) Taxation: You agree to cooperate with the tax consultants designated by us and, subject to the relevant legal conditions, pay taxes on your global income in India. vi) Salary Review and Adjustment: Your assignment salary shall be reviewed once per year during your assignment. Based on the review, our Human Resources department shall work with the relevant Human Resources department in the country of assignment to determine whether your salary will be adjusted. vii) Insurance: Private Group Insurance: You shall be provided with additional group life insurance plan for the duration of your assignment abroad with coverage of BRL 280 000. 2.2 On the basis of above evidence, the show-cause notice alleged that the personnel on the pay roll of Schaeffler Group company located abroad have been put on assignments with the appellants. On these assignments, the personnel were expected to work under overall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duplicate appointment letter and return it to us. ix) All other terms and conditions are applicable to you as per your original contract. 2.4 On the basis of aforesaid fact, Ld. Counsel argued that the said personnel are their own employees and not the employees of the foreign associated company. He argued that if any amount was paid, or was to be paid, to foreign associated companies in respect of such personnel it was only for the sake of convenience. 2.5 Ld. Counsel further argued that foreign associated companies are not engaged in the business of supplying manpower and therefore no tax can be levied by treating them as manpower supply agencies. He argued that during the period of deputation, the foreign company ceases to be the employer of the said personnel and therefore, any deputation of such personnel to India cannot be treated as supply of manpower. Ld. Counsel argued that such arrangements nothing but sharing of employees among the group companies. Ld. Counsel argued that when the personnel are deputed to India they cease to be the employee of foreign associated companies. 2.6 Ld. Counsel argued that mere payment made to foreign associates is not enough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order. Ld. AR took us through the agreement between the foreign associated company and the employee deputed by the said company to the appellants. He specifically pointed out to certain clauses in the said agreement: Tasks : For the duration of your assignment, your employment contract with us shall be suspended and the conditions of this agreement shall apply. The stipulations of the foreign assignment guideline dated are part of this agreement as far as specific rights and duties have been defined between you and us. Duration : The assignment shall be for a limited time beginning on 27/01/2011 and ending on 27/01/2013. The assignment shall end or the end date and no further notice shall be required. We reserve the right to consider extending the assignment beyond 27/01/2013 by mutual agreement. As extension is made by giving further notice. During the assignment period, proper termination of your domestic employment with us may be given. This has no effect on the right to extraordinary terminator. Transfer Salary: Your salary shall be based on the agreement made with the company who sent you on your assignment in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the best of our abilities. Taxation: You agree to cooperate with the tax consultants designated by us and subject to the relevant legal conditions, pay taxes on your global income in India. Salary Review and Adjustment: Your assignment salary shall be reviewed once per year during your assignment. Based on the review our Human Resources department shall work with the relevant Human Resources department in the country of assignment to determine whether your salary will be adjusted. Statements/Claims: Your primary employer shall remain in charge of any claims for this employment including the duration of your assignment. All statements in this regard must be submitted to the primary employer. Company Pension Plan: You shall continue to be included in the regulations of the company pension plan applicable to you. (if any). During your assignment, your continued shadow salary shall be used as the basis for calculating your prospective entitlement. Renunciation of severance payments: You agree to refrain from demanding a termination payment or severance payment or any other payment that the company of assignment would usually pay on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weekly working hours in India are 48 hours. Vacation: Irrespective of the specific number of vacation days in the country of assignment, you shall be entitled to 30 days of vacation per year. Right to Request Early Return: We reserve the right to terminate your assignment early by observing an adequate time limit and in agreement with the host company, including during the term of the long term assignment agreement, and to request your return if this is in the interest of the company or should become necessary as a result of your personal conduct. In the event of an early return request you must end your employment with the company of assignment at the same time. Unavoidable costs incurred in conjunction with your early return from the assignment shall be paid by the company of assignment provided that proof of such costs is submitted. An early return shall end your assignment including all conditions agreed herein. 4.3 Even the salary to be paid to the employee decided by the foreign associated company as is apparent from the following clauses of the agreement: Transfer Salary: Your salary shall be based on the agreement made with the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rces department shall work with the relevant Human Resources department in the country of assignment to determine whether your salary will be adjusted. 4.7 Apart from the above requirements, the foreign associated company also prohibits the deputed personnel from getting any severance pay from the appellants as is apparent from the following clause of the agreement: Renunciation of severance payments: You agree to refrain from demanding a termination payment or severance payment or any other payment that the company of assignment would usually pay on the occasion of an employee leaving the company due to existing legislation or customs in the country of assignment. Should such benefits be made available to you based on compulsory regulations, you shall return all such payments to the company. If applicable, the company may also offset such payments with existing or future claims on your part. 4.8 In view of the above terms and conditions of the foreign associated companies the personnel deputed to the appellant remains in control of the foreign associated company and continues to get the insurance, retirement benefits, and protection in the shape of deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Counsel of the appellant indicates that the personnel who are deputed to India are taken on rolls as employees of the appellant/assesee. If that be so, the question of rendering any services to the appellant by Lear Corporation, USA does not arise by any extent of imagination . It is seen that in the said case the foreign associated company had no control over the determination of the remuneration of the employee, there was no control over the terms and conditions of the employment in the form of vacation and working hours. The salary of the person was not determined by the foreign associated company. The salary review and adjustment was not the responsibility of the foreign associated company. The foreign associated company did not prevent the employee from getting the severance payment. In view of the above terms on deputation in the instant case are significantly different from the terms of payment in the case of Lear Automotive (I) Pvt. Ltd. (supra). 5.2 It is also seen that reliance has been placed on the decision in the case of Paramount Communication 2013-TIOL-37-CESTAT-DEL, the employee continue to work for two sister companies. In these circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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