Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Finance Act |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Finance Act, 1994 – Service Tax – Secondment Agreement; Service Agreement – Revenue issued four show cause notices (SCNs) alleging that the respondent-assessee failed to discharge service tax under the category of “manpower recruitment or supply agency service” with regard to certain employees who were seconded to the assessee by the foreign group companies – Demands confirmed by Commissioner of Service Tax–Commissioner had also discharged the proceedings arising from a show cause notice–Appeals by Revenue as well as by assessee –Revenue’s appeals were rejected while that of the assessee’s were allowed by CESTAT – On appeal, held: Assessee was the service recipient for service (of manpower recruitment and supply services) by the overseas entity, in regard to the employees it seconded to the assessee, for the duration of their deputation or secondment – Assessee liable to pay service tax for the periods spelt out in the SCNs, consequential demands therefore, shall be recovered from the assessee – However, the invocation of the extended period of limitation was unjustified – Impugned common order of the CESTAT is set aside – Commissioner’s orders in original are restored, except to the extent they seek to recover amounts for the extended period of limitation – The demand against the assessee, for the two separate periods, shall be modified, excluding any liability for the extended period of limitation.Secondment Arrangement– Held: In a typical secondment arrangement, employees of overseas entities are deputed to the host entity (Indian associate) on the latter’s request to meet its specific needs and requirements of the Indian associate – During the arrangement, the secondees work under the control and supervision of the Indian company and in relation to the work responsibilities of the Indian affiliate – Social security laws of the home country f the secondees) and business considerations result in payroll retention and salary payment by the foreign entity, which is claimed as reimbursement from the host entity. Finance Act, 1994 – s.65(44) – Held: By s. 65(44), “service” means (a) any activity (b) carried out by a person for another (c) for consideration, and (d) includes a declared service (the term “declared service” is defined in s. 66E) – However, s. 65(44) excludes from its sweep [by clause (b)], “a provision of service by an employee to the employer in the course of or in relation to his employment”.Deeds and Documents – Interpretation of documents – Held: One of the cardinal principles of interpretation of documents, is that the nomenclature of any contract, or document, is not decisive of its nature – An overall reading of the document, and its effect, is to be seen by the courts. Contract – Contract of service or Contract for service – Held: There is not one single determinative factor, which the courts give primacy to, while deciding whether an arrangement is a contract of service (as the assessee asserts the arrangement to be) or a contract for service – The general drift of cases which have been decided, are in the context of facts, where the employer usually argues that the person claiming to be the employee is an intermediary – Supreme court has consistently applied one test- substance over form, requiring a close look at the terms of the contract, or the agreements. |
Judge | Hon'ble Mr. Justice S. Ravindra Bhat |
Neutral Citation | 2022 INSC 598 |
Petitioner | C.c., C.e. & S.t. – Bangalore (adjudication) Etc. |
Respondent | M/s Northern Operating Systems Pvt Ltd. |
SCR | [2022] 18 S.C.R. 901 |
Judgement Date | 2022-05-19 |
Case Number | 2289 |
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