R.K Singh:— Stay application alongwith appeal has been filed against Order-in-Original No. 35.COMM/NOIDA/2012-13 dated 29 October, 2012 which confirmed the demand of Rs. 10,28,77,633/- for the period 2006-07 to 2010-2011 alongwith interest and penalties under section 76, 77 & 78 of the Finance Act, 1994.
2. The assessee is subsidiary of M/s. Samsung Electronics Corporation, Korea. They entered into a contract with SEC Korea under which SEC Korea provided expatriates to the appellants for which the appellants paid certain amount to SEC, Korea. The adjudicating authority held that it amounted to SEC, Korea providing manpower recruitment or supply agency service and as they (SEC Korea) did not have their office in India, the appellants were liable to pay service tax as per the reverse charge mechanism and hence, the consequential impugned demand alongwith interest and penalty as above.
3. The appellants have contended that secondment of the staff from the parent company to the appellants would not come under the manpower recruitment or supply agency service and therefore, the demand is not sustainable. They cited several judgements in support of their claim.
4. We find that the issue has been the subject matter of several judgements. In the case of Paramount Communication Ltd. v. CCE, Jaipur 2013 TIOL (37) CESTAT-Del, CESTAT held that sharing service of some of the office personnel with the sister concern does not fall in the category of supply of manpower. In the case of Commissioner Of Service Tax v. Arvind Mills Ltd. - 2014-TIOL-441-HC-AHM-ST High Court held that “the respondent in order to reduce his cost of manufacturing, deputed some of its staff to its subsidiaries or group companies for stipulated work or limited period - All throughout, the control and supervision remained with the respondent - Actual cost incurred by the company in terms of salary, remuneration and perquisites is only reimbursed by the group companies there is no element of profit or finance benefit-subsidiary companies cannot be said to be their clients - there was no relation of agency and client - Tribunal has rightly held that service rendered by the respondent is not a taxable activity attracting service tax”
Similarly in the case of Bain & Company India Pvt. Ltd. v. CST, Delhi, CESTAT vide Final Order No. ST/A/51414-51415/2014-CU [DB] dated 27.02.2014 held as follows:-
“5. We have considered the submissions form both the sides and perused the records. The major component of the service tax demand in these appeals is under manpower supply service on the payments made by the appellant to their holding company in USA in respect of expatriate employees, who were originally the employee of the holding company based in USA and who have been deputed to the appellant company in India. It is not disputed that their salaries have been paid in India and income tax has also been 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 on 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.”
5. In the light of the foregoing, the learned AR also agreed that the issue is no longer res-integra and is covered in favour of the appellants. Accordingly, we waive the pre-deposit and allow the appeal.
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