MUMBAI, MAY 23, 2013: THE appellant employed personnel belonging to their group company in Germany for a specific period . During this period, the appellant entered into agreements with the personnel for their employment. Since the personnel employed were foreign nationals, about 25% of the salary was paid in India in Indian currency and the balance 75% was paid by the group company in Germany to the credit of accounts of the personnel employed and thereafter, debit notes were raised on the appellant by the foreign entity towards reimbursement of the salary paid in Germany. For the income earned in India by the personnel, the appellant also discharged the Income Tax liability showing the personnel employed as their own employee.

The Central Excise department was of the view that the transaction involved comes within the purview of ‘Manpower Supply or Recruitment Agency services' and for the amount remitted to the German entity for payment of salary to the personnel employed in India, a show-cause notice was issued demanding Service Tax thereon.

Since the demands were confirmed by the CCE, Pune-I , the appellant is before the CESTAT.

It is submitted as under -

+ that the personnel employed by them remained their employees during the period of the agreements and, therefore, there is no supply of manpower by the German entity. Since the employees are foreign nationals, part of their salary is paid in Germany through their group company.

+ merely because the payment has been made through the German entity, the activity does not come under the purview of ‘Manpower Supply or Recruitment Agency Service'.

+ Reliance is placed on the decisions in ITC Ltd. Vs. Commissioner of Central Excise, New Delhi - 2012-TIOL-855-CESTAT-DEL; Paramount Communication Ltd. vs. Commissioner of Central Excise, Jaipur 2013-TIOL-37-CESTAT-DELand UTI Asset Management Co. Ltd. Vs. Commissioner of Service Tax, Mumbai 2012-TIOL-1822-CESTAT-MUM.

The Revenue representative fairly admitted that the Tribunal in a number of decisions cited by the appellant had granted interim stay.

The Bench considered the decisions cited by the appellant and viewed that the appellant has a strong case in their favour for grant of stay. Accordingly, the CESTAT granted unconditional waiver from pre-deposit of the dues adjudged against the appellant and stayed the recovery.

Das Auto!

(See 2013-TIOL-774-CESTAT-MUM)