ST - So long as Mr Sloan is serving in India, he will be treated to be employee of applicant though his interests as employee of NAC, US, insofar as social security interests are concerned, will be taken care of by NAC, US - no question of attracting service tax in respect of the salary paid: AAR
BY TIOL News Service
NEW DELHI, DEC 05, 2015: THE applicant is a subsidiary of their American Company and aresurface mining activity specialist.
NAC, India has employed Steve R. Sloan who is on the permanent roll of NAC, US, however, his services were required by the Indian company for its activities. There is a tripartite agreement between NAC, US, NAC, India and Mr. Sloan. Under this agreement, the services of Mr. Sloan were to be utilized by NAC, India for a particular term. From the agreement,it is apparent that so long as Mr. Sloan serves in India, all his salaries are to be paid by the Indian company i.e. NAC, India. It is also provided in the agreement that even when Mr. Sloan stays in India and serves NAC, India, his social security interests shall be taken care of by the American company. There is no agreement that the social security interests taken care of by NAC, India are in any manner reimbursed by the NAC, India to NAC, US.
The applicant is before the Authority for Advance Rulings &relies on the definition of ‘service' and more particularly on the exclusion provision under Section 65 (44)(b), which suggests that a provision of service by an employee to the employer in the course of or in relation to his employment shall not be included in the definition of service. Inasmuch as since Mr. Sloan is providing the service to the applicant in his capacity as an employee which is clear from the wordings of the agreement, there is no question of any service tax provision being applicable to the salary paid by NAC, India to Mr. Sloan, the applicant contended.
The Authority while agreeing with the contention of the applicant observed -
"…We will have to go by the definition of service and if the definition of service excludes the service offered by an employee to the employer then it has to be so held. For interpreting this clause then we can not go to the past entries available prior to 2012 and can not interpret this clause on the basis of that Entries that will be against the canons of interpretation. As if this is not sufficient, then we look at the agreement which is appended with the application. The agreement is very clear to suggest that so long as Mr. Sloan is serving in India, he will be treated to be the employee of the applicant though his interests as the employee of NAC, US, insofar as the social security interests are concerned, will be taken care of by NAC, US. It is trite that he does not get the salary from NAC, US when he is offering services to NAC, India in that behalf, the benefits are mutually exclusive, at least so far as, they are concerned with the salary. The only obligation on NAC, US is regarding the social securities which are not reimbursed by NAC, India to NAC, US The learned counsel is prepared to go on record and we record his statement that there is no such reimbursement regarding the social security borne by NAC, US in respect of Mr Steve R. Sloan."
Incidentally, while negating the submissions made by the Departmental Representative the Authority observed that Reserve Bank of India's circular will have no bearing and will be irrelevant insofar as the interpretation of the services is concerned.
In fine, the Authority for Advance Rulings held that there could be no question of attracting service tax in respect of the salary paid to Mr. Sloan.
(See 2015-TIOL-08-ARA-ST)
