Whether the secondment of employees from the overseas group company to an Indian subsidiary exigible to GST?
Whether the secondment of employees from the overseas group company to an Indian subsidiary exigible to GST?
Here is an interesting case wherein some of the employees were seconded by the overseas group company to the petitioner company. These employees were hired by the petitioner for a short period of time and subsequently repatriated to the overseas company.
The Court observed that –
1) Second proviso to Rule 28(1) of the CGST Rules, 2017 states that in case the recipient is eligible for full input tax credit, then the value of supply as declared in the invoice, in relation to the services provided by the supplier to its related entity, shall be deemed to be the open market value.
2) Circular 210/4/2024-GST dated 26th June’24 states that in case no invoice is raised for the services provided by the foreign affiliate to its related Indian company, then the value of supply of services shall be deemed as ‘Nil’. This is subject to the Indian company being eligible for availing full input tax credit.
3) There are chances that the said circular may be questioned as being contentious or contrary to Rule 28 of the CGST Rules, 2017 because it is founded on the tenuous thread of parties choosing either to generate an invoice or avoid it.
However, as no invoice is raised in this case, hence, the Court concluded that the value of the service should be treated as ‘Nil’ in light of the explicit terms of the circular.
Metal One Corporation India Pvt. Ltd. v/s UOI [2024-VIL-1161-DEL]
The copy of the order is as under:
