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TMI Blog2020 (3) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Joint Venture Company of M/s. NSK Ltd., Japan and M/s. ABC Bearings Ltd., India as per an agreement signed between the parties on 06.03.2007. During the year 2007-08, a total amount of Rs. 85,18,155/- had been accounted by the appellant as expenditure in foreign currency and an amount of Rs. 85,28,000/- as "Salary Payable to T-NSK Payments" in their Trial Balance for the year 2008-09. Further, a Master Secondment Agreement has been signed by the appellant with M/s. NSK Ltd., Japan and M/s. ABC Bearings Ltd., India (referred to as Home Companies) on 16.10.2007 regarding employment of persons of the Home Companies at appellant's company on a temporary secondment basis. 2. After scrutiny of records, the department was of the view that appellants are liable to pay Service Tax under 'Manpower Recruitment and Supply Agency Service', 'Computer Network Service' (on-line information and database access and/or retrieval services) and 'Consulting Engineer Service'. Show Cause Notice dated 19.04.2010 was issued proposing to demand Service Tax under the above categories along with interest and also for imposing penalties. After due process of law, the Original Authority vide order impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments. Further, that C.B.E.C. vide Master Circular dated 23.08.2007 has clarified the same. In the said agreement, it is stated that the appellant shall be responsible for the payment or provision of salaries, bonuses, etc., to the employees and that M/s. NSK Ltd., Japan shall be responsible for the payment of "Differential Expenses" incurred by the employee in India as a consequence of residing and/or working in India and also that the appellant shall reimburse the said amount. 3.2.2 Further, that the foreign company is not a Manpower Recruitment and Supply Agency as defined in Section 65 (68) of the Finance Act, 1994. He relied on the decision in the following cases to support his arguments : (i) Volkswagen India (P) Ltd. v. C.C.E. [2014 (34) S.T.R. 135 (Tri. - Mum.)]; (ii) Commissioner v. Volkswagen India (P) Ltd. [2016 (42) S.T.R. J145]; (iii) C.C.E. v. Computer Sciences Corpn. India P. Ltd. [2015 (37) S.T.R. 62 (All.)]; (iv) Bain & Co. India Pvt. Ltd. v. C.S.T., Delhi [2014 (35) S.T.R. 553 (Tri. - Del.)] 3.3.1 With regard to the demand under the category of 'Computer Network Service' (on-line information and database access and/or retrieval service), the Learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional services/support during project implementation, the appellant has not considered the gross amount for discharging the Service Tax. The appellant has paid Service Tax on the consideration, but however has not included the travelling expenses which are nothing but reimbursable expenses. In paragraph 14.1 of the Show Cause Notice, it is observed that these are reimbursements. From the discussion in the said paragraph, it is clear that the amounts being reimbursable expenses, the appellant is not liable to pay Service Tax. 3.5 Learned Counsel for the appellant also argued on the ground of limitation. He submitted that the issues under consideration are all involving high degree of interpretation and litigations were pending on such issues before various fora. There is no element of wilful suppression, mis-statement, fraud or collusion with intent to evade payment of Service Tax, for which reason the extended period of limitation cannot be invoked. He also prayed to set aside the penalties. 4.1 Learned Authorized Representative (A.R.) Shri. S. Balakumar appeared and argued the matter on behalf of the Revenue. He supported the findings in the impugned order. 4.2.1 It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative submitted that it is not disputed by the appellants that the above service was provided to them by M/s. NSK Ltd., Japan. They are liable to pay Service Tax on the gross amount i.e. the sum total of the amounts claimed by M/s. NSK Ltd., Japan through invoices/debit notes. However, they have not paid the Service Tax on the gross amount and have excluded certain charges like travel expenses, etc. The appellant has to discharge Service Tax on the gross amount as envisaged in Section 67 of the Finance Act, 1994. He prayed to dismiss the appeal. 5. Heard both sides. 6.1.1 The first issue is with regard to the demand under 'Manpower Recruitment and Supply Agency Service'. From the facts brought out on record as well as after perusal of the Master Secondment Agreement, it is seen that M/s. NSK Ltd., Japan deputed staff to the appellants generally for a period of two or three years. The said staff were under the payroll of the relevant foreign company and the appellant is responsible for payment of salary, bonus, etc., to the employees. After the work period, they would return to the parent company. The salary package for the above deputed staff is in the designated foreign cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and responsibilities like other employees of the assessee in India. A letter of employment was entered into between the expatriate employee and the assessee from the date when the employee was transferred to India for the duration of the employment in the country. 4. The assessee stated that it had incurred expenditure on social security benefits of the expatriate employees in India including by way of provident fund. Tax was deducted from the salaries payable to the expatriate employees on the basis of the total income earned, on behalf of the employees and the assessee issued Form 16 and Form 12BA to the employees, in its status as an employer. The assessee also remitted to its group companies certain social security and other benefits that were payable to the accounts of the expatriate employees under the laws of the foreign jurisdiction. 5. The Commissioner in the order of adjudication confirmed the demand of tax, interest and penalties on the basis that the assessee had provided a taxable service within the meaning of Section 65(105)(k) of the Act of 1994. Under Section 65(105)(k) a taxable service is a service provided or to be provided "to any person by a manpower recr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted at source in India. Only the amount payable towards social security in respect of these employees has been paid by the holding company in USA and the same has been reimbursed by the appellant to the holding company in foreign exchange. Just because the social security contribution in respect of the expatriate employees was paid by the holding company, the expatriate employees cannot be treated as the employees of the holding company provided to the appellant company on manpower supply basis. We find that same view has been taken this issue by the Tribunal in the case of Volkswagen India Pvt. Ltd. (supra) & Paramount Communication Ltd. (supra). In view of this, the service tax demand on this basis is not sustainable." 6.5 From the discussions made above as well as following the ratio in the above two cases, we are of the considered opinion that the demand under Manpower Recruitment and Supply Agency Service cannot sustain and requires to be set aside, which we hereby do. 7.1 With regard to the second issue, which is the demand of Service Tax on Computer Network Service (on-line information and database access and/or retrieval service), it is seen from the invoice that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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