Daimler India Commercial Vehicles Pvt ... vs Commissioner Of Gst&Cce(Chennai ... on 2 July, 2025

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Custom, Excise & Service Tax Tribunal

Daimler India Commercial Vehicles Pvt ... vs Commissioner Of Gst&Cce(Chennai ... on 2 July, 2025

THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
                     CHENNAI
                   REGIONAL BENCH - COURT No. I


      Service Tax Appeal No.41621 to 41625 of 2019
      (Arising out of Order-in-Original No.04-08/2019, dated 27.06.2019 passed by the
                       Commissioner of CGST & Central Excise, Chennai)



Daimler India Commercial Vehicles Pvt. Ltd.                             ... Appellant
SIPCOT Industrial Estate, 8B/2,
Singaperumal Koil Road,
Oragadam Village, Sriperumbudur
Chennai 602 105
                      VERSUS

The Commissioner of CGST & C.Ex.                                       ...Respondent

Chennai Outer Commissionerate, Newry Towers, No.20504, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai 600 040 APPEARANCE:

Shri Raghavan Ramabadran, Advocate for the Appellant Ms. Anandalakshmi Ganeshram, Authorized Representative for the Respondent CORAM :

HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) HON'BLE MR. AJAYAN T.V. MEMBER (JUDICIAL) FINAL ORDER Nos.40683-40687/2025 DATE OF HEARING: 27.02.2025 DATE OF DECISION :02.07.2025 Per AJAYAN T.V.

M/s. Daimler India Commercial Vehicles Pvt. Ltd, the appellant herein, has preferred these five appeals assailing the impugned common Orders-in-Original Nos.04-08/2019 (STA-1) dated 27.06.2019 (OIO in short) whereby the adjudicating authority, while adjudicating a show cause notice and subsequent four statements of Demand, covering the period from 2008-09 to June 2017, had confirmed the demands of service tax payable along with applicable interest and imposed penalties under Section 76, and 78 of the Finance Act, 1994 (Act in short).

2. Briefly stated, facts pertaining to the allegations raised in the SCN issued to the Appellant, are that the Appellant is registered with the Service Tax Department under the categories of "Management Consultants, Consulting Engineer, Technical Inspection & Certification, Business Auxiliary Service. Transport of Goods by Road, Business Support Services, Renting of immovable Property Service and Information Technology Software Service."

3. The appellant is also engaged in the business of manufacturing and selling commercial vehicles trading of vehicles and their spare parts, providing shared services and also providing Annual Maintenance Contracts, Warranty and Extended warranty for the vehicles sold. The appellant has started commercial production in June 2012. The appellant has been paying Service Tax as Service Provider and Service Receiver for various services provided and received in terms of Section 68(1) and (2) of the Finance Act, 1994. During the course of compliance verification, while verifying the expenditure made in foreign currency for the corresponding value for discharge of service tax, it was found that the appellant has not discharged the service tax liability on the amount paid for the import of manpower. The company employs expatriates from their group companies for working in India, at the premises of the assessee and disbursed remuneration categorized by the assessee as salary in the Balance Sheet.

4. The appellant on enquiry stated that the expatriates are under dual employment and that once their term with the appellant is over, unless the contract is renewed, they would join back the Principal Company by default. The appellant has also stated that the expats are appointed for a stipulated period in India and that 100% of their salary is subject 3 to Income Tax in India. The appellant produced a framework agreement for International Transfers of Employees between M/s. Daimler AG, Germany and M/s. Daimler Hero Commercial Vehicles Limited, New Delhi. Appellant vide letter dated 22.02.2013 has stated that the company was incorporated on 10th December 2007 in the name of Fortius Motors Limited which was a Joint Venture between Daimler AG, Germany, Hero Corporate Services Limited and Flourishing Manufacturing & Automotive Limited (together referred as 'Hero') and the name of the company was subsequently changed to Daimler to Hero Commercial Vehicles Limited on 8th lune 2008. After the exit of 'Hero' the name of the company was changed to Daimler India Commercial Vehicles Limited. As the appellant has not provided any amendment/ addendum executed, if any, to the framework agreement for International Transfers of Employees between M/s. Daimler AG, Germany and M/s Daimler Hero Commercial Vehicles Limited, New Delhi, the Department went on to consider the same as the base agreement for employment of expatriates.

5. The Department was of the view that the above said services received by the appellant from its group companies would be covered under the definition of manpower services / 'Services' and the appellant is liable to pay service tax on the consideration paid/credited to the holding company account by the appellant, towards supply of manpower under reverse charge mechanism in terms of Section 68(2) of the Finance Act 1994 read with Rule 6 of Service tax Rules, 1994. The appellant has obtained registration on 20.10.2009. In view of the above, the appellant is liable to pay service tax for the import of manpower services from its grout company located in a foreign country. 4

6. Therefore, alleging contraventions of various provisions of Chapter V of Finance Act, 1994 and Service Tax Rules, 1994, the following SCN and Statements of Demand were issued to the appellant:

S. SCN/SOD Period Amount Provisions invoked under No & Date involved Finance Act 1994 No Service Interes Penalty tax . t 1 323/2014 2008-09 to 14,44,04,740 proviso Section Section 14.10.2014 2012-13 to 75 76, 77 & Section 78 73(1) 2 15/2015 2013-14 5,39,68,688 Section Section Section 20.03.2015 73(1) 75 76 & 77 3 10/2016 2014-15 4,35,86,947 Section Section Section

07.04.2016 73(1) 75 76 (1) 4 17/2017 2015-16 4,65,76,069 Section Section Section 21.03.2017 73(1) 75 76 (1) 5 04/2019 April 2016 7,74,54,201 Section Section Section 04.04.2019 to June 73(1) 75 76(1) & 2017 77

7. The appellant filed replies refuting the allegations, pursuant to which, after due process of law, the adjudicating authority issued the impugned common order in original confirming the demands alongwith applicable interest and imposing penalties. Aggrieved, by the same the appellant having preferred this appeal, is before this Tribunal.

8. Shri. Raghavan Ramabhadran, Advocate, appeared and argued on behalf of the appellant. Consequent to leave sought for filing the submissions reduced to writing, which was granted, written submissions dated 12-03-2025 was filed stating as under:

8.1 The Appellant is a wholly owned subsidiary of Daimler AG, Germany, (hereinafter referred to as 'Daimler AG') and is engaged in the business of manufacture and sale of commercial vehicles in Indian as well as foreign market.

8.2 The Appellant had entered into two framework agreements with Daimler AG, termed as 'Framework Agreement for International Transfers of Employees' ('FAIT'), with effect from 01.01.2008 and 01.01.2014 respectively. Under FAIT, the Home Company, i.e., Daimler AG, will transfer employees to the Host Company i.e., the Appellant, at the request of the Appellant. [Para 4.10 and 4.11 of the Impugned Order, Pg. 48] 8.3 The transfer is for the exclusive use of the Home Company i.e., the Appellant and the expatriate employees carry out only the work of the Appellant. [Para 4.11 and 4.22 of the Impugned Order, Pg. 49, 52] 8.4 The cost of transfer viz. salary to be paid to the transferee (expat employee), will be entirely borne by the Appellant. The cost of transfer shall be paid in accordance with the policies and guidelines of the Appellant. [Para 4.12 and 4.14 of the Impugned Order, Pg. 49, 50] 8.5 A portion of the salary, if required by the transferee, shall be paid in foreign currency. This portion of the salary is paid by Daimler AG on behalf of the Appellant for administrative convenience and is later reimbursed by the Appellant on a cost-

to-cost basis. [Para 4.12 and 4.14 of the Impugned Order, Pg. 49, 50] 8.6 A separate employment contract is entered into between the Appellant and the expat employees. [Para 4.14. of the Impugned Order, Pg. 50] 8.7 Control and supervision over the work done by the expat employees lies with the Appellant [Para 4.22 of the Impugned Order, Pg. 54] 6 8.8 The Appellant deposits provident fund contribution for the expat employees during their period of employment. The entire salary, including the portion paid on behalf of the Appellant by Daimler AG and reimbursed by the Appellant, is subjected to income tax in India and TDS under Section 192 of the Income Tax Act, 1961 is deducted on the entire portion. [Para No. 4.19 and 4.20 of the Impugned Order, Pg. 53]

9. Apart from the above, the following key clauses of the FAIT highlight the nature of the transaction and existence of employer- employee relationship between the Appellant and the expat employees:

9.1 The offer made by the Home Company, i.e., Daimler AG for transfer of an employee has to be accepted by the Host Company i.e., the Appellant. [Clause 2.1. Pg. 74] 9.2 During the period of secondment, the expat employees will not act on behalf of Daimler AG and will be under the direction, control and supervision of the Appellant. Daimler AG is not responsible for any damage caused due to the actions of the expat employees [Clause 2.4, 2.5, 2.6, Pg. 75] 9.3 The cost of transfer shall be the liability of and paid by the Appellant based on its policies and guidelines. [Clause 4.3, Pg.76] 9.4 A separate employment agreement is entered between the Appellant and the expats and the expats are integrated into the Appellant's company. The employment of expats with Daimler AG is made inactive during the period of secondment. [Clause 7, 1.6, Pg. 77] At this juncture, it is submitted that the salary 7 of expat employees is expressed in INR in the employment Agreement. [Pg. 93] 9.5 The agreement shall not be construed as Daimler AG providing any service to the Appellant. [Clause 13, Pg.80]

10. It is the case of the Department that the Appellant is liable to pay Service tax under RCM on the portion of the salary reimbursed to Daimler AG, as the same is consideration for provision of manpower supply services by Daimler AG to the Appellant.

11. The Appellant denies all the allegations made by the Department and makes the following submissions, each of which are taken without prejudice to each other.

12. The Impugned Order is not sustainable as there is no provision of service in the present case. There exists employer-employee relationship between the Appellant and the expat employee. 12.1 The Impugned Order has confirmed the demand of Service tax on the ground that Daimler AG is providing Manpower Recruitment and Supply Agency Services to the Appellant under Section 65(105)(k) of the Finance Act, prior to 01.07.2012, and is providing 'taxable service' under Section 65B(44) of the Finance Act, post 01.07.2012.

12.2 The Impugned Order has confirmed the demand on the premise that the expat employees continue to be employees of Daimler AG during the period of transfer and there is no employer-

employee relationship between the Appellant and the expat employees.

12.3 that Daimler AG is not providing any service to the Appellant under FAIT. The Impugned Order is contrary to the express provision of the FAIT and employment contract with the expats. 12.4 From the undisputed facts and clauses of the agreement, it is evident that there exists employer-employee relationship between the Appellant and the expats. Further, the employment of expats with Daimler AG is made inactive during the period of secondment.

12.5 that Daimler AG makes payment of a portion of salary only on behalf of the Appellant. Therefore, an agency between the Appellant and Daimler AG is also expressly established under the FAIT. Further, the expats are employed exclusively for the purpose of Appellant's business in India.

12.6 that there exists operational and administrative control over the employees by the Appellant. Further, the Appellant also possesses economic control over the expat employees as the salaries are paid by the Appellant as set out by the separate Employment Contract and in terms of policies and guidelines of the Appellant; that there is no supply of manpower services between Daimler AG and the Appellant.

13. The facts in the present case are different from the facts involved in the Judgment of the Hon'ble Supreme Court in Northern Operating Systems and therefore the contention of the Department that the decision of the Hon'ble Supreme Court in Northern Operating Systems Private Limited [(2022) 17 SCC 90] is squarely applicable to the facts of the present case, is incorrect. The said decision is not applicable to the present case for the following reasons: 9

13.1 In the case of Northern Operating Systems (supra), the assessee was engaged in providing back-office services to the overseas Company. For performing such services, the overseas company sends the employees to the assessee, who in turn are actually performing the services for the overseas Company's business. This was a vital fact in deciding that there was manpower supply service in the case of Northern Operating Systems (supra). However, in the present case, the employees are deployed to India do not undertake any specific task, resulting in supply of services back to the foreign company.

Instead, the employees seconded by Daimler AG hold positions which are solely concerned with the business operations in India. This is a crucial distinguishing factor between the facts of the instant case and the judgment of this Hon'ble Court in the case of Northern Operating Systems (supra).

13.2 In Northern Operating Systems (supra), the entire salary and emoluments were paid by the Foreign Company to the employee and later paid by assessee to Foreign Company. However, in the present case the obligation to pay the salary rests solely with the Appellant. For administrative convenience, only part of the salary is paid by Daimler AG on behalf of the Appellant, which is later reimbursed on cost-to-cost basis by the Appellant.

13.3 In Northern Operating Systems (supra), the foreign Company had created a pool of employees who are deployed to various affiliate companies to perform tasks in relation to business of the foreign group entity. However, there is no such pool of employees created in the present case and employees are 10 engaged in relation to business of the Appellant and not the foreign Company.

13.4 The judgment in Northern Operating Systems Pvt. Ltd. (supra) does not provide that all the secondments will amount to provision of Manpower Recruitment and Supply Agency Service, instead it clearly provides that one has to examine the nature of the contract, terms of the agreement and activity performed by the seconded employees and the relationship between the seconded employee, Indian Company and the foreign company to arrive at a conclusion in every case, whether this amounts to employment or not. Reliance is placed on the Circular issued by CBIC in Instruction No. 05/2023 dated 13.12.2023 which clearly states the decision in Northern Operating Systems is based on the unique characteristics of the specific arrangement therein and cannot be applied mechanically to all cases of secondment transactions.

13.5 the decision in Northern Operating Systems was only on the incidence of tax and the issue of valuation, revenue neutrality, etc., was not decided in the said case.

14. Without prejudice, no Service tax is payable in the absence of any consideration. Issue is no longer res integra. It is covered by decision of Hon'ble Supreme Court in Commissioner of CGST, South Delhi Commissionerate v. Boeing India Defense Pvt Ltd. - 2023 (12) TMI 239 - SC ORDER.

14.1 an activity is taxable under the Finance Act as a service only when such activity is carried out for a 'consideration'. 14.2 in the present case, the Impugned Order has proceeded on the sole basis that the amounts paid by Appellant, even though it is 11 nothing but reimbursement by the Appellant to Daimler AG, is the consideration for services rendered by Daimler AG. 14.3 admittedly, a portion of the salary containing amounts towards social security is paid by Daimler AG for administrative convenience on behalf of the Appellant and the same is reimbursed by the Appellant without any markup. This payment is also reported in the books of accounts under the head 'salary'. 14.4 it is a settled position of law that reimbursable expenses cannot be subjected to the Service Tax. In the case of Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT New Delhi, dated 10.05.2023, the very same issue of taxability as manpower supply service under RCM, in respect of seconded employees was considered. At para 11 therein, Hon'ble Tribunal duly notes that the issue of payment of service tax on secondment has been settled by the Supreme Court in Northern Operating Systems (supra). Thereafter, it goes on to examine the valuation aspect and drops the demand by placing reliance on Hon'ble Supreme Court decision in Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India [2018 (3) TMI 357 (SC)] wherein it has been held that reimbursement of expenses cannot be charged to service tax under Section 67 of the Finance Act. The said decision was taken on appeal by the Department before Hon'ble Supreme Court in Commissioner of CGST, South Delhi Commissionerate v. Boeing India Defense Pvt. Ltd. dated 24.11.2023 [2023 (12) TMI 239- SC]. Before the Hon'ble Supreme Court, the Department conceded that the issue stands covered by Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India [2018 (3) 12 TMI 357 (SC)]. Noting the same, vide order dated 24.11.2023, the Hon'ble Supreme Court dismissed the said appeal. A review petition filed by the Department against the same has also been dismissed by the Hon'ble Supreme Court in order dated 07.01.2025, in Commissioner of CGST, South Delhi Commissionerate v. Boeing India Defense Pvt. Ltd. [2025 (1) TMI 833 SC].

14.5 Reliance is also placed on the following cases:

(i) Intercontinental Consultants and Technocrats Pvt Ltd v.

Union of India, reported at 2013 (29) S.T.R. 9 (Del.) upheld by Hon'ble Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd., 2018 (3) TMI 357 (SC).

(ii) Bhayana Builders Private Limited v. Commissioner of Service Tax, 2013-TIOL-1331-CESTAT-DEL-LB, affirmed by Hon'ble Supermen Court in Commissioner of Service Tax Vs. Bhayana Builders (P) Ltd. (2018) 3 SCC 782.

(iii) Kou-Chan Knowledge Convergence (P) Ltd. v.

Commissioner of Service Tax, Service Tax Commissionerate, Bengaluru, 2024 (9) TMI 1249 - CESTAT Bangalore.

14.6 For the period post 14.05.2015, it is submitted that Rule 5 of the Service Tax (Determination of Value) Rules, 2006, was amended to include expenditure and costs incurred by the service provider in the course of providing taxable services. However, the expenditure and costs incurred as a pure agent is expressly excluded from the value of taxable services. 14.7 that conditions for exclusion of expenses incurred as a pure agent from the value of supply in terms of Rule 5(2) of the 13 Service Tax (Determination of Value) Rules, 2006, stands satisfied in the present case.

14.8 that Daimler AG acted as pure agent while paying a portion of the salary in foreign currency on behalf of the Appellant. Therefore, the reimbursable expenses are not includible in the value of taxable services even post 14.05.2015. Reliance in this regard is placed on the decision of Hon'ble Tribunal in Commissioner of Central Excise & Service Tax v. M/s Inductus Ltd. - 2025 (1) TMI 1036 - CESTAT Kolkata.

14.9 In any case, it is submitted that amount paid is in the nature of salary and is not a consideration for any service rendered to the Appellant. There is no element of quid pro quo in the transaction and mere reimbursement of salary cannot be subject to Service tax.

14.10 that Section 67 makes it clear that for the purposes of levying service tax, there should be some consideration flowing from the service receiver to the service provider and such consideration received by the service provider should be wholly or partly in money.

14.11 that no consideration is paid either in cash or in kind by the Appellant to Daimler AG in connection with transfer of expats. Further, since a part of salary is required by the expat employees to be paid in Home Country to take care of their home country fund requirements/ needs, Daimler AG is only facilitating payment of a part of salaries on behalf of the Appellant, and it is not receiving any consideration for the same. 14.12 The Department's contentions that Daimler AG has seconded employees to the Appellant upon payment of fee is factually 14 incorrect as there is no payment of fee by the Appellant to Daimler AG in the present case.

15. Decisions relied on by the Department are not relevant, distinguishable to the present case. Hence, not applicable to the present appeals.

A)Renault Nissan Automotive (2023 (7) TMI 635 - CESTAT Chennai) dated 15.06.2023

a) At para 13.7 therein of the judgment, the Hon'ble Tribunal expressly states that, in the facts and circumstances of that case, it has held that the agreements are more or less identical to that of Northern Operating Systems (supra). Whereas, in the Appellant's case, as stated above, the facts in Northern Operating Systems case and Appellant's case are diametrically opposite. Hence, it is not applicable.

b) In this case, the Hon'ble Tribunal did not have an occasion to consider the decision of Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT New Delhi, dated 10.05.2023, which has subsequently been upheld by Hon'ble Supreme Court, as stated above.

B) Nissan Motors India P. Ltd (2024-TIOL-1093-CESTAT MAD) Majority order of 3 Members, dated 07.11.2024.

a) The issue before the Hon'ble Tribunal was only with respect to valuation and the taxability of the transaction as manpower supply was not contested by the assessee. 15

b) The salary, in the above case, was paid partly in local currency and partly in foreign currency. On the portion paid in foreign currency by the overseas group Company and later reimbursed by the assessee therein, Service tax was remitted by the assessee considering the same to be consideration for manpower supply. In the said factual scenario, it was held that consideration under a single contract of service, cannot be vivisected and Service tax is liable to be paid on the entire consideration (including salary paid in India).

c) Applying the above principle to the present case, the Department has only disputed service tax liability on portion of salary paid in foreign currency and tax liability in respect of the salary paid in India to the expat employee is not disputed. Therefore, to that extent, Department has not disputed that employer-employee relationship exists between the Appellant and expat employees. On same parity that of Nissan Motors decision, the contract cannot be vivisected to tax only that portion of salary paid in foreign currency.

d) The salary was paid to expats as per the split formula decided by the overseas group company. In the present case, salary is based on policies of the Appellant (Clause 4.3 of FAIT) and the entire salary is expressed in INR in the employment contract. A portion of the salary is paid in foreign currency at the behest of the expat employee and the same is paid by Daimler AG on behalf of the Appellant.

e) The decision, in Hon'ble Technical member's portion of the order, dated 11.12.2023, states that the Northern Operating Systems case is not discussed in Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT New Delhi, dated 10.05.2023. However, as stated supra, the said decision has been duly considered in Boeing India (Tribunal) decision. It states that the taxability is decided in Northern Operating Systems case and proceeds to decide on the issue of valuation wherein it holds that it is duly covered by the decision of Intercontinental Consultants and Technocrats Pvt. Ltd., 2018 (3) TMI 357 (SC).

f) Also, the decision of Hon'ble Supreme Court in Commissioner of CGST, South Delhi Commissionerate v. Boeing India Defense Pvt. Ltd. dated 24.11.2023 [2023 (12) TMI 239-SC], which upheld the Boeing India (Tribunal) decision, was not brought to the notice and therefore not considered by the said judgement. C) International Seaport Dredging Ltd. [2023 (10) TMI 318- CESTAT Chennai] dated 15.09.2023.

a) Para 9.7 of the decision therein, is the only portion that renders finding on the issue. In the said judgement, there is no discussion on applicability of Intercontinental Consultants and Technocrats Pvt. Ltd., 2018 (3) TMI 357 (SC) case and it is a settled position in law that the judgement is a precedent only for what it decides and not 17 in what flows logically out of it. Hence, it is distinguishable.

D) Dell International Services India Pvt. Ltd. [2023 (2) TMI 183 - Cestat Bangalore] dated 03.02.2023.

a) Similar to Renault Nissan case, at para 11 therein of this decision, the Hon'ble Tribunal expressly states that, in the facts and circumstances of that case, it has held that the arrangements are similar to that of Northern Operating Systems (supra). Whereas, in the Appellant's case, as stated above, the facts in Northern Operating Systems case and Appellant's case are diametrically opposite. Hence, it is not applicable.

b) Also in this case, the issue of valuation in light of reimbursement of expenses was not argued before the Court. Hence, Hon'ble Tribunal did not have an occasion to consider the decision of Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT New Delhi, dated 10.05.2023, which has subsequently been upheld by Hon'ble Supreme Court, as stated above.

E) Sri Bhagavathy Traders [2011 (24) STR 290 - Cestat Bangalore Larger Bench dated 08.08.2011.

a) In this case, at para 6.1 therein, the Hon'ble Tribunal LB has laid down proposition on the scope of the term "reimbursements". It is extracted below.

6.1 Having analyzed the various decisions cited on behalf of the assessee and on behalf of the department, it would be appropriate to consider the scope of the term "reimbursements" in the context of money realized by a service provider. A person selling the goods to another cannot treat cost of raw materials or the cost of labour or other cost components for inputs services, which went into the manufacture of the said goods as reimbursements. If the buyer enters into a contract for supply of raw materials after negotiating prices from the supplier for the raw materials and the raw materials are received by the manufacturer and the manufacturer pays the amounts to the supplier of raw materials and recovers the same from the buyer, it can certainly be considered as reimbursements. It is to be noted that in such a case, the manufacturer has no role about choosing the source of the materials procured or the price at which the materials procured and the manufacturer is not under any legal or contractual obligation to pay the amount to the supplier. However, if the manufacturer procures raw materials from a source of his choice at a price negotiated between him and supplier of the raw materials and uses the material for manufacture of the final products which 19 he sells, the question of his collecting the cost of raw materials as reimbursement does not arise. The concept of reimbursement will arise only when the person actually paying was under no obligation to pay the amount and he pays the amount on behalf of the buyer of the goods and recovers the said amount from the buyer of the goods.

b) From the same, it is submitted that the Appellant's case is covered by the later example set forth, wherein the Daimler AG is under no obligation to pay the amount, and Daimler AG pays such amount on behalf of the Appellant and recovers it from the Appellant. Hence, this decision is furthering the case of the Appellant.

F) Canon India Pvt. Ltd. v Commissioner of Goods & ST, Gurgaon-I, STA no. 61410 of 2018, Majority order of 3 members, dated 21.11.2023.

a) This decision has not been relied upon by the Department in their written or oral submissions. However, we would like to bring it to the knowledge of this Hon'ble Court.

b) Similar to Renault Nissan case, at para 8 therein of the Hon'ble Third member order dated 17.11.2023, the Hon'ble Tribunal expressly states that the facts of that case is identical to that of Northern Operating Systems (supra). Whereas, in the Appellant's case, as stated above, the facts in Northern Operating Systems case and Appellant's case are diametrically opposite. Hence, it is not applicable.

c) Also in this case, the issue on valuation, in light of reimbursement of expenses was not argued before the Court. Hence, Hon'ble Tribunal did not have an occasion to consider the decision of Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT New Delhi, dated 10.05.2023, which has subsequently been upheld by Hon'ble Supreme Court, as stated above.

16. Without prejudice, Appellant is entitled to avail Cenvat Credit of Service tax payable, if any. Therefore, the entire demand of Service tax is revenue neutral.

16.1 The issue is no longer res integra. It has been settled by the jurisdictional High Court of Madras in the case of Flemingo Duty free Shop Private Ltd. v. Union of India, WP 4055 of 2018 - Madras High Court dated 30.03.2021. In the said case, tax liability under GST on account of supply of goods was held to be a revenue neutral situation as tax collected was entitled to be refunded to the assessee. The Hon'ble Court held that there is no useful purpose in first directing the assessee to pay tax and then filing refund claim for the tax paid.

16.2 The Appellant places reliance on the following decisions wherein the entire demand (including demand for normal period of limitation) was set aside on account of revenue neutrality:

(i) Commissioner of Customs & Central Excise, Ahmedabad v. Narayan Polyplast, 2005 (179) E.L.T. 20 (S.C.)

(ii) International Auto Ltd. v. CCE, Bihar, 2005 (183) E.L.T. 239 (S.C.) 21

(iii) Commissioner of Customs & Central Excise, Vadodara v.

Narmada Chematur Pharmaceuticals Ltd., 2005 (179) E.L.T. 276 (S.C.)

(iv) Commissioner of Customs & Central Excise v. Textile Corporation Marathwada Ltd., 2008 (231) E.L.T. 195 (S.C.)

(v) Indus Valley Partners (I) Pvt Ltd. v. Principal Commissioner of Central Tax, Noida, 2024 (389) E.L.T. 403 (Tri. - All.)

(vi) Indian Rayon and Industries Ltd. v. CCE, Calcutta IV, 2000 (119) E.L.T. 636 (Tribunal)

17. Without prejudice, extended period of limitation is not invokable in the facts of the present case.

a) that SCN No. 323/2014 dated 14.10.2014 has been issued for the period April 2008 to March 2013 by invoking extended period of limitation under Proviso to Section 73(1) of the Finance Act.

b) that demand for the period till July 2012 amounting to Rs. 10,07,16,562/- is confirmed under extended period of limitation, which is not invocable under the facts of the present case

c) that the issue of payment of Service tax on Secondment of employees involves interpretation of law and has been widely litigated in various forums.

d) that the Appellant has all along been under the bona fide belief that Service tax is not payable on the amount of salary reimbursed to Daimler AG.

e) reliance is placed on the decision of Northern Operating Systems (supra) wherein the demand under extended period of limitation was set aside.

18. No interest is chargeable, and no penalty is imposable in the present case.

19. Learned Authorised Representative, Ms. Anandalakshmi Ganeshram appeared and after detailed arguments, submitted the same as written submissions contending as below.

19.1 that during the secondment term, the expats deployed to the appellants remain the employees of the Daimler parent (Home company) and that the expats are supplied by the Daimler parent (home company) to the appellant under certain terms and conditions. In other words, expats are on regular rolls of the parent company and are deputed on international assignments to the appellant and are returned to the parent company on completion of the job/project.

19.2 that the expats are not recruited directly by the appellant, but only through Secondment Agreement. Also, though the appellant may make changes of expats depending on position and function and conditions of any contract applying to international transfer, the recommended changes have to be mutually agreed between the appellant and the home company. 19.3 that the part of remuneration paid to the expats in their home country by the parent company, which is ultimately borne by the appellant amounts to compensation paid to the parent company towards employing the expats. Therefore, this cash flow is to be construed as consideration for the services received 23 and the home company exercises complete control over the expats.

19.4 Considering the definition of "supply of manpower" under Section 2(g) of Service Tax Rules, definition of "manpower supply agency service" under Section 63(108)(k) and Section 66A of the Finance Act, 1994, the ST liability on reverse charge basis is justified by the fact that:

i.The service rendered falls within the definition under Sec.65(105)(k);

ii.The providers of the service (Daimler AG, Germany) have their permanent address in a country other than India; iii.The recipients of the service have their permanent address in India.

19.5 Reliance is placed on the judgement of the Hon'ble Supreme Court in the case of Northern Operating Systems P Ltd , 2022 -

TIOL - 48 - SC - ST - LB, wherein it was held that the service provided by the foreign company to the appellant based on secondment agreement comes under the category of Manpower Supply service and the appellant is liable to pay service tax, as well as the decisions in M/s. Renault Nissan automotive India Pvt. Ltd, 2023 (7) TMI 635 - CESTAT CHENNAI, Nissan Motors India P Ltd, 2024-TIOL-1093-CESTAT-MAD.

19.6 In the present case the agreement between the Service Provider and the Service Recipient is very clear that the service provider will have complete discretion over the salary, bonus, allowances paid to the secondee. Hence, the value of service is part of the contract between the service provider and the service recipient. 24

20. Ld. A.R. further submits that on perusal of the FAIT (Page 73 to 89 of the appeal paper book) it is clear that the activity of the appellant falls under the category of Manpower Supply service.

21. It is also submitted that the judgements relied upon by the appellants are distinguishable as below:

(i) UOI Vs Intercontinental Consultants and Technocrats P Ltd - 2018 (10)GSTL 401 (SC).

The issue regarding reimbursable costs was examined by the Hon'ble Supreme Court (3 Judge Bench) in Northern Operating System when the judgment in Intercontinental Consultants and Technocrats Pvt. Ltd (2 Judge Bench) was brought to the Hon'ble courts notice. It was submitted by the appellants that the demand of the service tax was being computed on the salaries and allowances paid to the employees. That any cost or expense reimbursed does not represent the gross value of taxable service and cannot be a consideration for charging service tax. This view did not find favour with the Hon'ble Supreme Court.

(ii) PC CGST, Delhi South Vs. Boeing India Defense P Ltd. - 2023(5)TMI 523 - CESTAT, New Delhi and 2023(12) TMI 239 - SC.

The facts of the case are entirely different from that of the present case. In the above referred judgement, the expenses relating to accommodation, hotel stay, car and education of dependent children of the seconded employees were paid by them and later reimbursement was claimed. This cannot be equated to the salary paid to the expats.

(iii) Kou-Chan Knowledge Convergence (P) Ltd VS. CST, Bengaluru - 2024(9) TMI 1249 and

(iv) CCE & ST, PATNA VS. Inductus - 2025(1) TMI 1036- CESTAT Kolkata.

Both the above mentioned judgements pertain to internally generated service and not import of service and the issue is entirely different. The appellants were the service providers and did not concern a foreign manpower supplier. But in the present case, the appellants are service receivers and the foreign manpower suppliers are involved and the appellants liable to pay ST under reverse charge mechanism.

22. Ld. A.R. submits that on the point of revenue neutrality raised by the appellant, reliance is placed on the decisions in:

(i) CCE, Chandigarh Vs. Baba Asia Ltd - 2011 (267) ELT 115 (Tri.Del), paragraphs 19 to 24.

(ii)Sun Pharmaceuticals Industries Vs CCE, Jammu - 2013 (289) ELT 449 (Tri. Del), paragraphs 33 & 34

(iii) Prithvi Information Solutions Ltd Vs. CCT, Ranga Reddy, GST - 2025 (2) TMI 901 - CESTAT HYDERABAD, para 22

(iv) Star Industries Vs. CC (Imports), Raigad -

2015(10)TMI 1288 - SC, para 35 & 36.

23. Ld. A.R. emphasizes that the issue regarding the activity of supply of manpower from a foreign company to an Indian Company through secondment agreement under RCM has been decided in favour of the Revenue in the case of Northen Operating Systems. The earlier referred judgements of both Renault Nissan and Nissan Motors of 26 Chennai Bench involve the same issue and though both the appellants had come on appeal on the grounds that the activity of the supply of manpower from the foreign company to the appellant company through Secondment Agreement does not come under the Manpower Supply service, later they fairly conceded that the activity falls under Manpower Supply service only after the issue has been settled in the Apex Court judgement of NOS. Hence whether the activity of supply of expats through secondment agreement falls under the Manpower Supply service or not is no longer res integra.

24. Ld. A.R. submits that the said expats working for the appellant were transferred to the appellant company from the foreign company based on their expertise, and thus the foreign company provides the Manpower Supply service to the appellant company. The contract is also for a particular period thus indicating it is temporary and at the end of the contract the expats will be expatriated to their parent company. This issue is no more res integra, the activity of sending the expats to Indian companies on a secondment basis falls under the Manpower Supply service as per the Apex Court judgement in the case of Northern Operating Systems.

25. It is the submission of the Ld. A.R. that there are two agreements / contracts entered into by the Appellant of which the first sets out the terms and conditions of the agreement for the loan of employees (secondee) by Home Company to the Host Company in India. The second is a separate agreement with the seconded / deputed employees, setting out the terms of their individual engagement. The first Agreement is pivotal and sets the tone of the discussion on 27 the value to be adopted for the purpose of assessment to tax and will help to find a solution to the lis between the contesting parties.

26. Ld. A.R submits that while examining an Agreement it is the true nature of the agreement that matters and not the form, for otherwise clever drafting can camouflage the real intention of the parties. The Supreme Court, in Commr. of Customs, Central Excise and Service Tax v. Northern Operating Systems (P) Ltd. [2022 SCC Online SC 658] = 2022-TIOL-48-SC-ST-LB which is critical in determining this issue states the law for service tax on secondee's, that " the nomenclature of any contract, of document, is not decisive of its nature ". The Hon'ble Court further held:

"48. The task of this court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided - in that context

- by the overseas group company to the assessee."

27. It is submitted that every agreement that is enforceable in law is a contract in the realm of private law. All conditions including 'consideration', 'breach', 'non-performance' etc. are to be understood between the parties accordingly. Its understanding is governed by the provisions of the Contract Act. Since the definition of consideration in a special act like FA 1994 is an 'inclusive' one, it would be beneficial to look at the definition of the said term under the Indian Contract Act, 1872 also before reverting to FA 1994. In this case the Contract Act complements the provisions of FA 1994 in understanding the term 'consideration'. 'Consideration' as given under section 2(d) of the Indian Contract Act, 1872 states.

(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from 28 doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

It is submitted that when Home Company makes a proposal for deputation of secondees to the Appellant for a certain consideration, which when accepted by the Appellant becomes a promise. Then Home Company is the promisor and the Appellant the promisee. The promise forming the consideration is an agreement. Hence when at the desire of Home Company, the Appellant has agreed to pay the consideration as an amount in money to the secondee, such an act involving the payment by the Appellant of the gross amount of the contract for supply of manpower by Home Company, as salary, bonus and allowances to the secondee, is the consideration for the promise made in the Agreement. In other words the amount paid by the Appellant to the overseas manpower supply service provider i.e. Home Company is the gross amount charged by them as consideration for the services and is equivalent to the salaries, bonus and allowances of the seconded employees. The mode of this payment is by the Appellant disbursing the monies to the secondee as per the instructions of Home Company.

28. It is submitted that with the above understanding under the Contract Act, the issue can be examined under FA '94. Section 67 of the FA, '94 has an inclusive definition of the term consideration. Section 67(4)(a) during the relevant time stated that consideration includes any amount that is payable for the taxable services provided or to be provided. Therefore, the following elements must be present to constitute a valid consideration, namely:

(i) any amount

(ii) that is payable 29

(iii) for the taxable services

(iv) provided or to be provided The nature and substance of the Agreement is with regard to a proposal for deputation / supply of secondees to the Appellant made by Home Company and sets the terms and conditions for the same.

The quid-pro-quo for the secondment agreement, where the appellant has the benefit of experts for limited periods, is implicit in the overall scheme of things. Hence, any amount that is payable to the overseas supplier of manpower for the taxable service, if paid or payable directly or indirectly to the secondee at the behest of the supplier i.e. by both the overseas supplier (reimbursable) plus the Appellant, represents the gross consideration for the service provided or to be provided. Since if this gross amount is not agreed to be paid the deputation would not have taken place and the Agreement would not be operable or if operative one of the parties to the contract could sue the other for damages for a breach or non- performance of the agreement as mentioned in the Agreement itself.

29. It is submitted that the Hon'ble Supreme Court's judgment in Northern Operating Systems states as under:

"57. The above features show that the assessee had operational or functional control over the seconded employees; it was potentially liable for the performance of the tasks assigned to them. That it paid (through reimbursement) the amounts equivalent to the salaries of the seconded employees - because of the obligation of the overseas employer to maintain them on its payroll, has two consequences: one, that the seconded employees continued on the rolls of the overseas employer; two, since they were not performing jobs in relation to that employer's business, but that of the assessee, the latter had to ultimately bear the burden. There 30 is nothing unusual in this arrangement, given that the seconded employees were performing the tasks relating to the assessee's activities and not in relation to the overseas employer. To put it differently, it would be unnatural to expect the overseas employer to not seek reimbursement of the employees' salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business."

30. It is submitted that the issue regarding including reimbursable costs of services was examined by the Hon'ble Supreme Court's (3 judge) in Northern Operating System (supra). The two Judge Bench judgment in Intercontinental Consultants and Technocrats Pvt. Ltd (supra) pertaining to Rule 5 and reimbursables was brought to the Hon'ble courts notice and it was stated that, the demand of the service tax was being computed on the salaries and allowances paid to the employees. That any cost or expense reimbursed does not represent the gross value of taxable service and cannot be a consideration for charging service tax. This view did not find favour and the Hon'ble Supreme Court, who while discerning the true nature of the relationship between the seconded employees and the assessee, made a conjoint reading of the terms and found that the salary payable as well as other allowances, such as hardship allowance, vehicle allowance, servant allowance, paid leave, housing allowance, etc. underscore the fact that the seconded employees are of a certain skill and possess the expertise, which the assessee requires. It also observed that it is doubtful whether without the comfort of this insurance, the deputed employees would agree to the secondment. The Hon'ble Court applied the test of substance over form and held revenue's appeals to succeed and the assessee was held liable to pay service tax. Judicial discipline 31 requires that the Apex Courts judgment in the Northern Operating System be followed more so in the case of overseas Manpower Supply Service.

31. It is submitted that in the Intercontinental Consultants and Technocrats (supra) it was averred by Revenue before the Apex Court that the expression 'gross amount charged' would clearly include all the amounts which were charged by the service provider and would not be limited to the remuneration received from the customer. The Hon'ble Court held that the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro quo for rendering such a service. It is clear that the entire Agreement entered into by Home Company with Host Company is only the gross amount charged by the service provider 'for such service'. As stated by the Apex Court in the Northern Operating System the amounts paid by the Appellant are "equivalent to the salaries of the seconded employees ".

32. It is submitted that as per the Framework Agreement for International Transfers of Employees, it is clear that

(i) The parties will engage in reciprocal business transactions involving transfer of certain staff employed by the respective party.

(ii) The parties acknowledge that the costs to be incurred related to the transfer of staff be borne by the Host Company.

(iii) The Host Company has to follow the Going Global policy as its own company policy.

(iv) All specific rules regarding conditions and costs of the transfer relate to the Going Global Policy.

(v) Before the start of any employee transfer, the parties need to describe the function/position in the separate employment contract.

(vi) The employment of the expats with the Home Company is made inactive during the period of Secondment Agreement and they will get repatriated at the end of the contract.

(vii) The agreement is entered into in a spirit of mutual trust and confidence.

From the above it is clear that the appellant company is bound to follow the Going Global policy, which has been replaced by the Global Mobility Policy from January 1st, 2014. Global mobility refers to managing both global and domestic assignments, national and international transfers, the planning and costing of inbound and outbound movements, being aware of the tax compliance issues, immigration issues as well as all the personal issues that arise in an organization of moving people globally. The aim is to utilize the skilled and top talented employees globally for the business development wherein the employers are reassessing the way that they manage their global mobility programs, especially in the areas of immigration, taxes and international employment law. The Secondment agreement is basically entered upon for easy management and ensuring effectiveness of employees during their assignments globally.

33. It is submitted that during the secondment term the expats deployed to the appellant remain the employees of the Daimler parent (home company) and that the expats are supplied by the 33 Daimler parent (home company) to the appellant on certain terms and conditions. The employment of the expats is not by recruitment of the employee directly by the appellant but only through secondment of the expats by Daimler parent (home company). As per agreement part of the compensation is granted by the Daimler on behalf of the appellant and the same is being reported to the appellant for onward reimbursements. The said compensation amount includes the assignment cost, financial commitments of the expat and the taxes to be paid in the home country. For effective cross charging of the cost monthly invoices are raised by Daimler on the appellant. Also the invoices required to achieve allocation cost of transfer are also forwarded periodically to the appellant's HR Department. This implies that appellant shall bear and reimburse Daimler all the expenses incurred towards employing expats. As per Article 7 with regard to General Obligations of the secondment agreement, a separate employment contract is entered upon between the appellant and the expat. The appellant may recommend the changes of the expats depending on position and function and the conditions of any contract applying to international transfer, but the recommended changes have to be mutually agreed between the appellant and Daimler. Daimler shall call back the expat to the home company but only after the termination of employment contract by the appellant. From the above mentioned General Obligation Clause, it is clear that the individual contract entered into between the appellant and the expats is purely based on the Secondment Agreement.

34. It is submitted that the dispute in the present case involves the interpretation of the terms of a contract between private parties, for 34 arriving at the value on which service tax is applicable. The contract is in the realm of private law, in which the stipulations of the parties constitute the law of the contract. The nomenclature of any contract, of document, is not decisive of its nature. While determining the actual consideration paid or payable it would be necessary to examine whether any part of service is optional or can be severed from the main contract and is not a part of the lump sum/gross amount agreed to be paid for the service received. As per the explanation to section 67 of the Finance Act 1994, effective from 14 May 2015, "consideration" includes any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed.

35. It is a settled principle in law that a contract is interpreted according to its purpose. The purpose of a contract is the interests, objectives, values, policy that the contract is designed to actualize. It comprises the joint intent of the parties. Every such contract expresses the autonomy of the contractual parties' private will. It creates reasonable, legally protected expectations between the parties and reliance on its results. Consistent with the character of purposive interpretation, the court is required to determine the ultimate purpose of a contract primarily by the joint intent of the parties at the time the contract so formed. It is not the intent of a single party; it is the joint intent of both the parties and the joint intent of the parties is to be discovered from the entirety of the contract and the circumstances surrounding its formation.

36. Reliance is placed on the judgement in the case of Great Eastern Shipping Company Ltd. Vs State of Karnataka [2020 (32) G.S.T.L. 3 (S.C.)] has held that it was submitted on behalf of appellant that the amendment to Finance Act had been made and a clarification dated 10-5-2008 has been issued that service tax is to be levied on the Charter Party Agreement. Reliance is placed on the judgement in the case of Cholan Roadways Ltd. v. G. Thirugnanasambandam [(2005) 3 SCC 241], this Court observed:

"34.... It is now well settled that a quasi-judicial authority must pose unto itself a correct question so as to arrive at a correct finding of fact. A wrong question posed leads to a wrong answer..."

{This judgment has been cited in Management of M/s Sonepat Co- operative Sugar Mills Ltd. Vs Ajit Singh [Supreme court, Civil Appeal Nos. 8453-54 of 2002. Dated. 14.2.2005; Madras High Court, T. R. Rajagopalan vs The Director General [W.P.No.26465 of 2010, Dated: 09/04/2021]}

37. It is submitted that hence the question to be asked is not whether amenities such as school fees, house rent allowance, etc are reimbursable expenses on a stand-alone basis, but as to what represents the gross amount on which service tax is applicable and if there are reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, whether they are includable in the value for purpose of calculating the service tax payable. As pointed out by the Hon'ble tribunal in 'Nissan Motors', that the service contract for secondment cannot be vivisected or split into two. The paramount test of understanding an agreement is the intention of the parties. Hence the question to be asked is did the parties have in mind or 36 intend separate rights arising out of payments to the secondee made in foreign currency and separate rights for payment in Indian Rupees. If there was no such intention, then in this case the Agreement was an indivisible contract.

38. Ld. AR submits that the factual position in the present case is similar. All payments made towards the contract are composite in nature and are part of the contractual payments and form the consideration for the service provided. Any attempt to vivisect the part related to amenities etc would make the contract unworkable. They have a nexus with the services provided. Without these allowances the contract would fail to materialize and no secondee would be willing to work. Once a lump sum or gross amount has been charged for the service by the supplier of service, it has to form the assessable value for the purpose of service tax.

39. It is submitted as per the Apex Court's judgment in CST Vs. M/s. Bhayana Builders Pvt. Ltd. [2018 (10) GSTL 118 (SC)], Revenue cannot go beyond the contract value to arrive at the value of taxable services. Hence all charges which are part of the gross amount as stated in contract, in this case, form the value on which service tax is applicable. Section 67(1)(i) of the Finance Act 1994, states that where service tax is chargeable on any taxable service with reference to its value, then such a value shall, in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him.

40. Ld. A.R. submits that the judgement of the Hon'ble Supreme Court rendered in 'Boeing India Defense' is based on a concession made by the Revenue. It does not decide a question of law on merits and hence does not serve as a precedent to be followed. It is open to Revenue to retrace or even resile from a concession once made in the Court on a legal proposition. This has been clearly observed in the Hon'ble SC judgement in the case of P. Nallammal and Another Vs State represented by Inspector of Police [1999 (6) SCC 559:JT 1999 (5) SC 410] as follows:

"The volte-face of the Union of India cannot be frowned at, for, it is open to the State or Union of India or even a private party to retrace or even resile from a concession once made in the court on a legal proposition. Firstly, because the party concerned, on a reconsideration of the proposition could comprehend a different construction as more appropriate. Secondly, the construction of statutory provision cannot rest entirely on the stand adopted by any party in the lis. Thirdly, the parties must be left free to aid the court in reaching the correct construction to be placed on a statutory provision. They cannot be nailed to a position on the legal interpretation which they adopted at a particular point of time because saner thoughts can throw more light on the same subject at a later stage."

Reliance is placed on the judgement in the case of M.P. Gopalakrishnan Nair & Anr. vs State Of Kerala & Ors on 20 April, 2005 [AIR 2005 SUPREME COURT 3053, 2005 AIR SCW 2292, of05 (4) SCALE 229] wherein it has been held a wrong concession of law cannot bind the parties, particularly when the constitutionality of a statue is in question.

41. It is submitted that the 'Boeing India Defense' judgment has also been examined by the three Member Bench in the case of 'Nissan Motors'. The doctrine of precedents requires that a Bench of lesser 38 Members should follow the decision of a Bench of larger number of Members. It is seen that the judgment in the case of 'Nissan Motors' has been rendered by 3 Members and is hence a judgment of a Larger Bench, whereas the judgment on 'Boeing India Defence' has been rendered by a Divisional Bench. Hence the Judgment of the Bench at Chennai with a larger number of Members would prevail over the Delhi Bench judgment. This issue was examined by the Hon'ble High Court of Delhi in the case of Puri (P.C.) v. Commissioner of Income Tax [(1985) 151 ITR 0584/ ILR 1984 DELHI 134] and the Principal Bench of CESTAT at New Delhi in the case of Larsen & Toubro Ltd. Vs CST, Delhi [2013-TIOL- 1458-CESTAT-DEL], wherein it has been held that "11. The issue whether a reference on a conflict emanating from the decision of a Division Bench which is resolved on a reference to a third member, is to be considered as a decision of a bench comprising three members, is no longer res-integra.

12. In Puri (P.C.), Vs. Commissioner of Income Tax - (1985) 151 ITR 0584, the Delhi High Court clarified the position as to the nature and effect of a judgment pronounced on a reference pursuant to a conflict. We re-produce the relevant observations:-

"(7) Before I proceed to deal with the two questions referred to us, I will deal with another question which was raised before me. It was suggested by counsel for the assessors that there being a conflict of decisions in this court on the matter of interest these references ought to have been placed before a full bench and not before a third judge. In my opinion there is no merit in this contention. Section 259 says-

"hearing High Court to be heard by not less than two judges-

(1) when any case has been referred to the High Court under section 256, it shall be heard by a Bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges.

(2)where there is no such majority, the judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other judges of the High Court, and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it."

(8) In accordance with this section the references under section 256 were heard by a bench of two judges of this court. On the first question they found that there was a conflict of decisions which required to be resolved. On the second point there was a sharp difference of opinion. So it became necessary to refer to a third judge. This is perfectly in accordance with section 259.

(9) There is no difference, really speaking, between a full bench of three judges sitting together and this method of referring to the third judge in the case of a difference of opinion between the two judges. Whether the first method is adopted or the second, "opinion of the majority" will be decisive. In this case there is a formal reference to a third judge to ascertain his opinion. His is the deciding voice. He turns the scales. The third judge is the full bench. Not alone. But along with two others who first heard the case. Whether the three judges sit at the same time or at different times-two at one time, and the third hearing the matter later on a difference of opinion-does not make much difference. As has happened in this case, the two judges have differed. So the case has come to me, the third judge. The two judges have expressed their opinion. I am now called upon to give my opinion. The opinion of the majority will prevail. All that happens is that the third is segregated from the two and does not sit with them. He comes in later on when there is a difference of opinion between them. In all cases it is the theory of numbers which is the foundation of the doctrine of stare decisis. Majority is a term signifying the greater number. Counting of heads underlies the theory of judicial precedents as in any majority decision. The constitutional requirement of a constitution court of five judges is based on this theory. Similarly the Code of Civil Procedure of 1908 enacts that in 40 case of difference of opinion the matter has to be referred to a third judge."

13. It was contended on behalf of Revenue that the above observations of the High court could neither be construed as the ratio or even obiter but must be confined to the factual matrix in which the observations are recorded. This contention does not commend acceptance. It requires to be noticed that the issue before the Delhi High Court arose out of a conflict of opinion emanating from a Division Bench decision in a reference made to the High Court under Section 256(1) of the Income Tax Act 1961. The statutory provisions in issue i.e. Section 25 of the 1961 Act enjoin that a case before the High Court ought to be heard by not less than two judges and that any case referred under Section 256 shall be heard by a Bench by not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or the majority if any of such judges. Sub-Section 2 further provides that where there is no such majority, the judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other judges of the High Court, and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it. The Counsel had urged before the High court that since there were conflicts in decisions of the High Court, the reference must be placed before three judges. The observations of the High court extracted supra were made in view of the issue as to whether a conflict in decisions of Division Benches could be resolved by referring the conflict for resolution by a third Judge and upon the opinion of the third ld. Judge, the opinion of the majority could be construed to be a decision by a full Bench.

14. On principle and in the light of the observations of the Delhi High court in Puri (P.C.) , we are of the considered view that wherever pursuant to a conflict opinion in a decision by a Division Bench, the conflict is referred to a third member of this Tribunal for resolution, the resultant judgement must be considered the judgement of a full Bench, as if it were a judgement of a larger Bench (three ld. Member) sitting en banc."

In the light of the legal position as stated by the Hon'ble Delhi High 41 Court in Puri (P.C.) Vs Commissioner of Income Tax (supra) and the judgment of the Hon'ble President, CESTAT, speaking for the Divisional Bench, in Larsen & Toubro Ltd., (supra) judicial discipline requires that the 3 Member judgment of this Tribunal in "Nissan Motors" be followed and the appeal be set aside.

42. It is submitted that regarding the point raised by the appellant regarding revenue neutrality, reliance is placed on the following decisions:

(i) Baba Asia Ltd 2011 (267) ELT 115 (Tri.Del)

(ii) Sun Pharmaceuticals Industries 2013 (289) ELT 449 (Tri. Del)

(iii) Prithvi Information Solutions Ltd 2025 (2) TMI 901 -

CESTAT HYDERABAD

(iv) Star Industries2015(10)TMI 1288 - SC.

43. It is also submitted by the Ld. A.R. that the appellants are liable to pay the service tax along with interest for the period from April 2008 to June 2017 as per Section 75 of FA, '94. The appellants have paid the service tax portion alone for the normal period from July 2012 to June 2015 on 06.02.2023. It is mandatory as per FA '94 to pay the interest at the applicable rate along with the Service Tax, which they have failed to pay. Hence, the contention on revenue neutrality ought not to be entertained as by doing so the department will lose the revenue of interest portion. That reliance is also placed on the following decisions:

    (i)          Northern Operating Systems P Ltd
                 {2022 (61) GSTL 129 (SC)}
    (ii)         Renault Nissan Automotive India P Ltd
                             42




          {2023 (7) TMI 635 - CESTAT CHENNAI}
(iii)     Nissan Motors India P Ltd
          {2024-TIOL-1093-CESTAT-MAD}
          Majority Order of 3 Members.
(iv)      International Seaport & Dredging Ltd
          {FINAL ORDER Nos. 40803-40806/2023}
(v)       Sri Bhagavathy Traders
          [{2011 (24) S.T.R. 290 (Tri. - LB)}
(vi)      Dell International Services Pvt. Ltd
          {2023(2)TMI 183 - CESTAT BANGALORE}
(vii)     Baba Asia Ltd
          {2011 (267) ELT 115 (Tri.Del)}
(viii)    Sun Pharmaceuticals Industries
          {2013 (289) ELT 449 (Tri. Del)}
(ix)      Prithvi Information Solutions Ltd
          {2025 (2) TMI 901 - CESTAT HYDERABAD}
(x)       Star Industries
          {2015(10)TMI 1288 - SC}
(xi)      Great Eastern Shipping Company Ltd.
          {2020 (32) G.S.T.L. 3 (S.C.)}
(xii)     Cholan Roadways Ltd.
          {(2005) 3 SCC 241}
(xiii)    Sonepat Co- operative Sugar Mills Ltd.
          {C.A.8453-54 of 2002}
(xiv)     T. R. Rajagopalan
          {W.P.26465 of 2010}
(xv)      Bhayana Builders Pvt. Ltd
               {2018 (10) GSTL 118 (SC)}
(xvi)     M.P. Gopalakrishnan Nair & Anr
          {AIR 2005 SC 3053}
(xvii)         Puri (P.C.)
          {(1985) 151 ITR 0584/ ILR 1984 Delhi 134}
(xviii)        Larsen & Toubro Ltd.
          {2013-TIOL-1458-CESTAT-DEL}
                                   43

44. We have heard both sides, perused the appeal records and the case laws submitted as relied upon by both parties.

45. The issues that arise for determination are:

A) Whether Daimler AG is providing Manpower Recruitment and Supply Agency Services to the Appellant under Section 65(105)K of the Finance Act, 1994 prior to 01-07-2012 and is providing taxable services under Section 65B(44) of the Finance Act, 1994 post 01-07-2012 and consequently the Appellant is liable to pay service tax under Section 66A of the Act ibid read with applicable provisions of Service Tax Rules and Place of Provision Rules? B) Whether extended period of limitation can be invoked in the facts and circumstances of the case?

46. We find that the issue whether the overseas group company or companies, with whom the assessee has entered into agreements, provide it manpower services, for the discharge of its functions through seconded employees has come up for analysis by the Honourable Supreme Court in its decision in C.C, CE & S.T., Bangalore (Adjudication) v. Northern Operating Systems Pvt Ltd, 2022 (61) G.S.T.L 129 (SC), wherein the Apex Court has after noticing the relevant provisions of the Finance Act, 1994 with amendments as they were prior to 01-07-2012 and post the amendments in 2012, with effect from 01-07-2012, upon extensive deliberations, concluded, for the reasons given therein that the respondent therein, i.e., the assessee, was the service recipient of manpower recruitment and supply services provided by the overseas entity, in regard to the employees it seconded to the assessee, for the duration of their deputation or secondment. 44 Furthermore, the Apex Court also held that the invocation of the extended period of limitation in both cases, by the revenue is not tenable.

47. In the instant case, the Appellant has contended that the aforesaid decision of the Apex Court would not apply to the facts and circumstances of the appellant's case, whereas the Revenue has contended that the appellant's case would be covered by the ratio of the decision of the Apex Court in Northern Operating Systems (NOS Judgement) and thus the demand is sustainable. The contentions of both sides have been reproduced above in extenso.

48. At this juncture, it would be relevant to note the terms of agreement and the contentions of the parties raised in the NOS Judgement as noted by the Apex Court.

"3. The nature and contents of the agreements, are discernible in their description, extracted from the impugned order - where the assessee has been referred to as "the appellant" by the CESTAT - which is as follows :

"The relevant terms of the agreement to understand the activity are as follows :

(a) When required Appellants requests the group companies for managerial and technical personnel to assist in its business and accordingly the employees are selected by the group company and they would be transferred to Appellants.

(b) The employees shall act in accordance with the instructions and directions of Appellants. The employees would devote their entire time and work to the employer seconded to.

(c) The seconded employees would continue to be on the payroll of the group company (foreign entity) for the purpose of continuation of social security/retirement benefits, but for all practical purposes, Appellants shall be the employer. During the term of transfer or secondment the personnel shall be the employee of Appellants. Appellants issue an employment letter to 45 the seconded personnel stipulating all the terms of the employment.

(d) The employees so seconded would receive their salary, bonus, social benefits, out of pocket expenses and other expenses from the group company.

(e) The group company shall raise a debit note on Appellants to recover the expenses of salary, bonus etc. and the Appellants shall reimburse the group company for all these expenses and there shall be no mark-up on such reimbursement."

As a matter of fact, the assessee issues the prescribed forms to the seconded employees, in terms of the Income-tax Act, 1961 (hereafter "IT Act"). Those individuals too file income-tax returns and contribute to the provident fund. Furthermore, NOS remits the above amounts in foreign exchange, which are reflected in its financial statements. The assessee is reimbursed (by the foreign entity, Northern Trust Company - hereafter described as such) for the amounts it pays as salaries, to these seconded employees. The assessee pays for certain services received from the group companies. The assessee used to discharge service tax on payments for such services in terms of Section 66A of the Act. The appropriate major expense heads were 'Salaries & Allowances', 'Relocation expenses', 'Consultancy Charges', 'Communication Expenses' and 'Computer Maintenance and repairs.'"

49. In NOS Judgement, the contentions of the Revenue, inter-alia were as under:

"14. The revenue contended that looking at an overall reading of the agreement, i.e. services agreement dated 1-9-2006 and its attachment, the master service agreement dated 12-2-2009 (with its annexures), the secondment agreement dated 1-4-2007, and the secondment assignment letter or agreement with the concerned employee clearly showed that the overseas employer provided the services of its employees to the assessee for the performance of agreed tasks. These tasks were handed over to the assessee by the overseas group company. It was not as if the assessee was free in regard to the manner of performance of the jobs assigned to it. The consideration provided to it was fixed (15% markup over the actual costs incurred); the costs included the remuneration nominally paid 46 by the assessee to the seconded employee. Further, those were reimbursed. For a temporary period, the seconded employee was only operationally under the control of the assessee. It was submitted that this arrangement was essential because without such control, it would not have been practicable for the assessee to have ensured performance of the tasks, it was expected to, through the seconded employees concerned. Yet, the fact remained that upon the cessation of the assignment, the employees reverted back to their original position in the overseas companies to work there or to be deployed elsewhere in terms of the global policy.

15. Learned Counsel submitted that a combined reading of the materials on record clearly establish that the arrangement between the assessee and its overseas group companies - apparent through the various conditions spelt out in different documents - was one of a contract for service. In other words, what was provided to the assessee by the overseas counterpart or group companies were services through its employees. These services directly pertained to the discharge of functions of the assessee.

16. It was argued that CESTAT's reasoning that the contract between the parties was not one in which the overseas group company supplied services, was erroneous. In this context, it was urged that the mere fact that the temporary control over the manner of performance of duties of the employees seconded did not take away or diminish the fact that their real employer was none other than the overseas company. The scale of payments made to such seconded employees was of such magnitude that they were regarded as highly skilled for the performance of specific tasks by the assessee.

17. It was argued that the real reason or purpose for the secondment by the overseas companies to the assessee was to ensure that their expertise was utilized for the performance of tasks by the assessee in terms of the service agreement and the master services agreement. Such secondment, it was contended, used their skill sets and expertise, to ensure the quality required by the overseas employer.

18. The Learned ASG relied upon the decision of the Supreme Court in Commissioner of Income Tax v. M/s. Eli Lilly & Company India Pvt. Ltd. [(2009) 15 SCC 1]. Reliance was also placed on Klaus Vogel's Treatise on Double Taxation [Klaus Vogel on Double Tax Conventions, Den Haag : Wolters Kluwer, Law and Business (2015)]. He also placed reliance on the judgment of this Court in Smt. Savita Garg v. Director, National Heart Institute [(2004) 8 SCC 56]; Workmen of Nilgiri Cooperative Marketing Limited v.

State of Tamil Nadu & Ors. [(2004) 3 SCC 514]; Silver Jubilee Tailoring House v. Chief Inspector of Shops [(1974) 3 SCC 498]; Hussain Bhai Calicut v. Alath Factory Thozhilali [(1978) 4 SCC 257] and Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd. [(2021) 7 SCC 151].

19. It was submitted that whether a particular contract is one for providing services or not is to be decided on the facts of an individual case. Further, the fact of control over the manner of performance of duties or any one such singular factor cannot be decisive. It was submitted that the facts of the present case clearly establish that the overseas company entered into specific secondment agreements by which its employees were deputed to work in the assessee's establishment. The tasks performed by them were in aid of the assessee's work which was undertaken by it in the service agreement with the overseas company. The salary, allowances the duration of the secondment, were all determined by the overseas employer and not by the assessee. Upon completion of the assignment, the seconded employees were to return to their original positions and in the overseas company. The control if any, which was with the assessee was for a limited duration - it was not enabled to impose sanctions, such as cut in salary, etc. In case it was dissatisfied, it could only ask for return of the employee to her or his original position with the foreign employer. Upon an overview of all these circumstances, it was clear that the contract between the parties was essential for the supply of services by the concerned overseas company to the assessee. Therefore, it was a taxable service and not excluded by virtue of amended Section 65 of the Finance Act, 1994." 48

50. The contentions of the assessee in the NOS Judgement were inter- alia, as under:

"20. Mr. V. Sridharan, Learned Senior Counsel appearing for the assessee urged that a conjoint reading of Section 65(68) with Section 65(105)(k) of the Finance Act, 1994 makes it clear that the 'manpower recruitment and supply agency service' seeks to bring under its ambit two types of activities i.e. recruitment of manpower and supply of manpower. Further the service becomes a taxable service only if provided by a manpower recruitment or supply agency. In the present case, the dispute pertains to whether the secondment of employees by the group companies to the Respondent will be regarded as supply of manpower.

21. It was argued that Circular F. No. B1/6/2005-TRU, dated 27- 7-2005 clarified the scope of 'Manpower Recruitment or Supply Agency' service to include staff who are not contractually employed by the recipient but come under his direction. This view is further strengthened by Master Circular No. 96/7/2007-S.T., dated 23-8- 2007. It was contended that post July, 2012, under the Negative List Regime, by Section 65(44) of the Finance Act, 1994, the services provided by an employee to the employer in the course of employment are kept beyond the ambit of the definition of 'service'. Thus, the position of law both prior to as well as post July, 2012 is same. Employee-employer relationship is outside the scope of the said service. The category of supply of manpower by an agency covers those cases where the manpower so supplied, comes under the direction and control of the recipient without contractual employment.

22. Learned Counsel argued that, ever since the introduction of service tax in India, service by an employee to an employer was never subject to service tax. There is no country in the world which levies VAT/GST on employment service, or any services rendered by an employee to the employer.

23. Counsel urged that the agreements entered by the assessee with its group companies were to provide certain specialized services. The seconded personnel are contractually hired as the assessee's employees. Control over them is exercised by the 49 assessee. Such employees devote all their time and efforts under the direction of the assessee; their remuneration is also fixed by it. The employees seconded to India are required to report to the assessee's designated offices. They are accountable for their performance to the assessee; the process of dispersal of the salaries and allowances is solely for the sake of convenience and continual of the social security benefits in the expats home county.

24. It was urged that in Collector of Central Excise & Service Tax v. Nissin Brake India (P) Ltd. [Civil Appeal Diary No(s). 45344/2018 (C.A. No. 2408/2019)] [2019 (24) G.S.T.L. J171 (S.C.)], this Court while considering similar set of facts dismissed the revenue's appeal, which had challenged the CESTAT's ruling that expenses reimbursed by the Indian companies to the foreign group companies in relation to seconded employees cannot be subject to service tax under Manpower Recruitment or Supply Agency Service.

25. It was also urged that the group companies are not in the business of supplying manpower. The foreign group companies are engaged in providing Personal Financial Services (PFS) and Corporate and Institutional services along with investment products. The foreign group companies cannot be considered as "Manpower Supply Agency".

26. It was next urged that service tax is leviable only on the gross amount charged for the provision of service. It was argued that assuming but not admitting that service is provided by the group companies to the assessee, it cannot be said that the value of consideration for that service is the amount of salaries paid to the expats. To determine value of taxable services for charging Service Tax, gross amount charged for providing the services is to be determined. Reliance is placed on the judgment of the Delhi High Court in Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India [2013 (29) S.T.R. 9 (Del.)], which held that Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 goes beyond the mandate of Section 67 of the Finance Act, 1994 as quantification of the value of the service can never exceed the gross amount charged by the service provider for the service provided by him. This position was upheld by this Court in 50 Intercontinental Consultants and Technocrats Pvt. Ltd. [(2018) 4 SCC 669 = 2018 (10) G.S.T.L. 401 (S.C.)]. In the present case, the demand of the service tax is being computed on the salaries and allowances paid to the employees. The salaries cannot be said to be consideration paid to group companies for provision of service and thus such demand (of service tax in lieu of salaries), is untenable. Therefore, any cost or expense reimbursed does not represent the gross value of taxable service and cannot be a consideration for charging service tax.

27. Counsel argued that debit notes raised by the overseas entity upon the assessee show that amounts paid were towards reimbursement of salaries and other allowances to employees. There was no mark-up charged by the foreign company.

28. It was next submitted that the demand to the extent of ` 8,12,62,382/- for the period October, 2006 to September, 2010, should be set aside. The assessee was under the bona fide belief that the seconded employees were its employees and therefore, not covered under the ambit of manpower supply services. Further, in any case, the assessee is entitled to avail refund of the service tax paid on input services under Rule 5 of the Cenvat Rules read with Rule 6A of the Service Tax Rules, 1994. Therefore, there can be no intention to evade tax. Counsel also urged that the bona fide belief was further strengthened by the fact that for the subsequent period (April, 2012 to September, 2014), the Adjudicating Authority itself dropped the demand by recording favourable findings.

29. It was lastly urged that services received by the assessee from foreign group companies would qualify as input services and that it is eligible to avail credit of service tax paid on such input services. Therefore, even if the said demand of service tax is paid, the entire amount is available as input credit and is refunded to the Respondent in cash by virtue of Rule 5 of the Cenvat Rules read with Rule 6A of the Service Tax Rules, 1994 ("1994 Rules"). The assessee relied on detailed facts in this regard through affidavit on record by its affidavit dated 17-8-2021 before this Court. It is also on record that all the refund claims filed by the assessee had largely been granted barring small amounts which were paid 51 against input services such as Clearing and Forwarding Agent Services, Courier Services, Information Technology Software Services. In this regard, reliance is placed on SRF Ltd. v. Commissioner [2016 (331) E.L.T. A138 (S.C.)] and Commissioner of Central Excise v. Coca-Cola India Pvt. Ltd. [2007 (213) E.L.T. 490 (S.C)]."

51. Bearing the issues framed in this case, the issues that arose in the NOS Judgement, the contentions of the revenue therein as well as the contentions of the assessee in the said Judgement as noted supra, in our minds, we now examine the agreements that have been made available in the appeal records of this case. We note from the Framework Agreement for International Transfer of Employees signed by the Appellant on 28-04-2001 and the subsequent Framework Agreement for International Transfer of Employees ( FAITE) signed by the Appellant on 25-07-2014, that both stipulate that the parties have been and will engage in reciprocal business transactions involving transfer of certain staff employed by the respective party. The relevant clauses of FAITE signed by the Appellant on 28-04-2001 are as under:

    Clause of FAITE            Particulars

    Clause 1.1 - Home          Party which transfers a transferee

    Company

    Clause 1.2 - Host          Party to which the transferee         is
                               transferred by the Home Company
    Company

    Clause 1.5 - Separate      Separate legal document between the
                               host company and the transferee has
    Employment Contract        to be entered in conjunction with this
                               framework. The document will specify
                               the details of employment and the
                               roles and responsibilities of the
                               transferee.
    Clause 1.6 - Transferee    Person whose employment with the
                               home company has been made
                            52




                         inactive and is offered an employment
                         with the host company under the terms
                         of the agreement.

Clause 2 - Transfer of The Home Company will make an offer concerning an individual transferee Staff and inform the Host Company about the current salary and family status. If the Host Company accepts the transferee, the transfer shall be carried out. (2.1) The parties agree to transfer or otherwise make available employees/transferees on the basis of the framework agreement in conjunction with the separate employment contract for each transferee. The host company examined the Daimler Going Global Policy and found that this policy is appropriate for the host company for transfers under this agreement and the host company introduces the Going Global Policy in its version of 01-01- 2008 as its own company policy. Host company shall not amend that policy unless otherwise agreed. (2.2) The transferee is not permitted to act for and on behalf of the Home Company (2.4) The transferee shall be subject to the directions of the Host Company. While under employment with the Host Company, the transferee shall be under control and supervision of the Host Company (2.5) Home Company is not responsible for any loss or damage caused to Host Company as a result of action of the transferee. (2.6) Clause 3 - Function / The function/position of the transferee has to be specified in the separate Position / Job Employment Contract. (3.1) The Host Company will provide the job Description at Host description requirement to the Home Company. (3.2) Company The appraisal and evaluation of the transferee will be undertaken by the Host Company. (3.3) Clause 4 - Cost of Costs of Transfer represent the sum of employment costs as agreed between Transfer the parties on arms lengths condition.

Benefits and conditions of every transfer are governed by the framework. (4.1) 53 The transfer is for the exclusive use of Host Company. The Host Company will bear all costs of transfer. (4.2) The Costs of Transfer of the transferee shall be the liability of and paid by the host company based on its policies and guidelines. Further, in order to facilitate financial commitments of the transferee in the home country (including but not limited to insurance, mortgage, social security, retirement contributions, etc.), the transferee would be paid part of his salary - if required from the transferee directly to his home country bank account subject to obtaining necessary regulatory approval. (4.3) The Host Company is responsible for complying with tax withholding requirements under the laws of the Host Country. (4.4) Clause 5 - Payment If any costs have to cross charged, the effective costs shall be cross charged Terms by monthly invoices. (5.1) Clause 6 - Intellectual Intellectual property developed by the transferee during his/her transfer will Property be the absolute property of the Host Company. (6.1) Clause 7 - General A separate Employment relationship or Contract must be established between Obligations Host Company and transferee.

The transferee shall be integrated in the respective host company's organization and. equipped with power of attorney for the respective host company as needed.

While the transferee is employed in the Host company because of the separate employment contract - with the employment with the Home company being made inactive the transferee is not authorized to execute any powers of authority given from the Home company. [7.1] Changes The host company may recommend changes of the transferee's employment status including his/her position or function as well as the conditions of any contract applying to the international transfer. However the recommended changes have to be mutually agreed between home and host company [7.2] Transfer 54 With mutual consent of the transferee, home company and the host company the host company is authorised to transfer the transferee to suitable other duties and to transfer the transferee-also on temporary basis- to another acceptable duty station. The moving expenses necessitated by this shall be borne by the host company.

The home company reserves the right to call the transferee back to the home company on short notice.[7.3] Clause 10 The agreement and all transactions between the parties will be governed by and construed in accordance with the laws where the home company has its principal place of business as if entirely performed therein without giving effect to tis conflicts of law principles Clause 13 - This Agreement shall not be construed as Home company rendering any Independence of Parties service to Host company.

52. The relevant clauses of FAITE signed by the appellant on 25-07- 2014 is as under:

Clause of FAITE Particulars Clause 1.1 - Home Party which transfers a transferee Company Clause 1.2 - Host Party to which the transferee is transferred by the Home Company Company Clause 1.5 - Separate Separate legal document between the host company and the transferee has Employment Contract to be entered in conjunction with this framework document, which is issued for every individual transfer governed by the Going Global Policy or the 'Global Mobility Policy'. The separate employment contract will specify the details of employment and the roles and responsibilities of the transferee.

Clause 1.6 - Transferee Person who is offered an employment with the host company under the terms of the agreement.

Clause 2 - Transfer of The Home Company will make an offer concerning an individual transferee Staff and inform the Host Company about the current salary and family status. If the Host Company accepts the transferee, the transfer shall be carried out. (2.1) The parties agree to transfer or otherwise make available employees/transferees on the basis of the framework agreement in conjunction with the separate employment contract for each transferee. The host company examined the Daimler Going Global Policy and the Global Mobility Policies and found that these policies are appropriate for the host company for transfers under this agreement and the host company introduces the Going Global Policy and the Global Mobility Policies in its latest version as its own company policy. Host company shall not amend that policy unless otherwise agreed. (2.2) The transferee is not permitted to act for and on behalf of the Home Company (2.5) The transferee shall be subject to the directions of the Host Company. While under employment with the Host Company, the transferee shall be under control and supervision of the Host Company (2.6) Home Company is not responsible for any loss or damage caused to Host Company as a result of action of the transferee. (2.7) Clause 3 - Function / The function/position of the transferee has to be specified in the separate Position / Job Employment Contract. (3.1) The Host Company will provide the job Description at Host description requirement to the Home Company. (3.2) Company The appraisal and evaluation of the transferee will be undertaken by the Host Company. (3.3) Clause 4 - Cost of Costs of Transfer represent the sum of employment costs as agreed between Transfer the parties on arms lengths condition.

Benefits and conditions of every transfer are governed by the current 56 version of the Going Global Policy or the Global Mobility Policies. (4.1) The transfer is for the exclusive use of Host Company. The Host Company will bear all costs of transfer. (4.2) The Costs of Transfer of the transferee shall be the liability of and paid by the host company based on its policies and guidelines. Further, in order to facilitate financial commitments of the transferee in the home country (including but not limited to insurance, mortgage, social security, retirement contributions, etc.), the transferee would be paid part of his salary - if required from the transferee directly to his home country bank account subject to obtaining necessary regulatory approval. (4.2) The Host Company is responsible for complying with tax withholding requirements under the laws of the Host Country. (4.3) Clause 5 - Payment If any costs have to cross charged, the effective costs shall be cross charged Terms by monthly invoices. (5.1) Clause 6 - Intellectual Intellectual property developed by the transferee during his/her transfer will Property be the absolute property of the Host Company. (6.1) Clause 7 - General A separate Employment relationship or Contract must be established between Obligations Host Company and transferee.

The transferee shall be integrated in the respective host company's organization and. equipped with power of attorney for the respective host company as needed.

While the transferee is employed in the Host company because of the separate employment contract - with the employment with the Home company being made inactive the transferee is not authorized to execute any powers of authority given from the Home company. [7.1] Changes The host company may recommend changes of the transferee's employment status including his/her position or function as well as the conditions of any contract applying to the international transfer. However the recommended changes have to be 57 mutually agreed between home and host company [7.2] Transfer With mutual consent of the transferee, home company and the host company the host company is authorised to transfer the transferee to suitable other duties and to transfer the transferee-also on temporary basis- to another acceptable duty station. The moving expenses necessitated by this shall be borne by the host company.

The home company may call the assignee back to the home company only after termination of the employment contract by the host company.[7.3] Clause 13 - This Agreement shall not be construed as Home company rendering any Independence of Parties service to Host company.

53. It is also seen from the sample Contract of employment dated 20th June 2011 in respect of Mr. Kivanc Gezgen, Turkey, provided by the Appellant as part of its Appeal, that it states inter-alia that the transferee is reporting to Vice President Procurement, the place of work is stated initially at Chennai for 3 years and could be shifted to other locations/stations as per requirements of the Appellant, the renumeration package for the international assignment will be INR 10,424,207 plus Indian taxes, that as part of the annual income, the transferee will receive a monthly salary after deduction of applicable taxes; that if required by the transferee to receive a part of the salary outside India in order to meet the transferee's financial commitments in Germany, he will receive a portion of his salary directly into his German Bank account after necessary statutory deductions. the relocation costs, Company car & driver, holiday entitlement and leave entitlement is "as per our company policy". It 58 is also stated that a detailed appointment letter will be issued by the company at the time of joining.

54. The Appellant had on the basis of the above contended as under:

a. From the undisputed facts and clauses of the agreement, it is evident that there exists employer-employee relationship between the Appellant and the expats. Further, the employment of expats with Daimler AG is made inactive during the period of secondment.

b. that Daimler AG makes payment of a portion of salary only on behalf of the Appellant. Therefore, an agency between the Appellant and Daimler AG is also expressly established under the FAIT. Further, the expats are employed exclusively for the purpose of Appellant's business in India. c. that there exists operational and administrative control over the employees by the Appellant. Further, the Appellant also possesses economic control over the expat employees as the salaries are paid by the Appellant as set out by the separate Employment Contract and in terms of policies and guidelines of the Appellant; that there is no supply of manpower services between Daimler AG and the Appellant.

55. The Ld. A.R has submitted as under:

"It is submitted that the dispute in the present case involves the interpretation of the terms of a contract between private parties, for arriving at the value on which service tax is applicable. The contract is in the realm of private law, in which the stipulations of the parties constitute the law of the contract. The nomenclature of any contract, of document, is not decisive of its nature. While determining the 59 actual consideration paid or payable it would be necessary to examine whether any part of service is optional or can be severed from the main contract and is not a part of the lump sum/gross amount agreed to be paid for the service received. As per the explanation to section 67 of the Finance Act 1994, effective from 14 May 2015, "consideration" includes any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed.

It is a settled principle in law that a contract is interpreted according to its purpose. The purpose of a contract is the interests, objectives, values, policy that the contract is designed to actualize. It comprises the joint intent of the parties. Every such contract expresses the autonomy of the contractual parties' private will. It creates reasonable, legally protected expectations between the parties and reliance on its results. Consistent with the character of purposive interpretation, the court is required to determine the ultimate purpose of a contract primarily by the joint intent of the parties at the time the contract so formed. It is not the intent of a single party; it is the joint intent of both the parties and the joint intent of the parties is to be discovered from the entirety of the contract and the circumstances surrounding its formation."

56. We wholly concur with the submissions of the Ld. A.R. above as to the manner in which contracts are to be interpreted. The FAITEs and the separate contract of employment appear to convey that there exists a dual employer-employee relationship, one between the 60 Home Company and the transferee and the other between the Host Company and the transferee. But more on the import of the FAITEs and the relationship it reveals, later. The agreements are structured in a manner that the Costs of Transfer of the transferee shall be the liability of and paid by the host company based on its policies and guidelines. Further, in order to facilitate financial commitments of the transferee in the home country (including but not limited to insurance, mortgage, social security, retirement contributions, etc.), the transferee would be paid part of his salary - if required from the transferee directly to his home country bank account subject to obtaining necessary regulatory approval." (clause 4.3 of the FAITE). The salary of the transferee is subjected to Indian Income Tax Act and Social Security Contributions. The thrust of the agreement appears to be an attempt to establish that there is no permanent service establishment of the Host Company in India.

57. We find that in the instant case the appellant as host company will provide the home company with a job description requirement containing information of level, function, location of the transferee and it is for the home company then to make an offer concerning an individual transferee informing the appellant about the transferee's current salary and family status, and thereafter upon the appellant's acceptance of the offer, the transfer is carried out in accordance with the FAITE. The transferee while under employment with the appellant would report to appellant's management. They shall function under the control, and supervision of appellant. The remuneration to be paid by the respondent is thus premised on the transferee's current salary while with the Home Company. While the FAITE clause stipulates that the transferee would be paid part of his 61 salary - if required from the transferee directly to his home country bank account subject to obtaining necessary regulatory approval. No evidence has been let in that the transferee had made such a request though the agreement stipulates that such a payment is contingent on the transferee's request. That apart, the agreement appears to convey that it is the Home Company that would be directly remitting the said component subject to obtaining necessary regulatory approval. However, in practice the appellant has stated that it is the Home Company who is paying the said amounts to the transferee on behalf of the Host Company. Thus, although the agreement stipulates that the employment with the Home Company is inactive during the period of secondment and that the Costs of Transfer of the transferee shall be the liability of and paid by the host company, yet the paying of the said amounts relating to the transferees social security, pension contribution etc, by the Home Company is nothing but the continuance of the obligations of the Home Company to the transferee being fulfilled, evidently to be in compliance of the local laws of the Home Company, which is thereafter being recouped by the Host Company. In other words, it is the actual liability of the Home Company to pay these amounts in compliance with the local laws and it is not that of the Host Company. Therefore, unlike a reimbursement where the actual liability to pay is of the person who reimburses the money to the actual payer, here the actual liability is not of the Home Company but that of the Host Company. Therefore, when the liability itself being that of the Home Company as the actual payer is being so discharged by the Home Company, the said amount being paid by the Host Company is only in fulfilment of its liability to pay the COSTS of the transfer of the transferee and is not a reimbursement 62 but a recoupment of the said payment, as the liability to pay these amounts as per the local laws governing such social security contributions or pension contributions being made by the Home Company in its relationship with the transferee as the employee was, is, and has always been with the Home Company, and it was never on the Host Company in the first place. For the aforesaid reasons, we are also unable to subscribe to the appellant's contention that such payments of social security amounts by the Home Company was on behalf of the appellant and that too in the capacity of an agent of the appellant.

58. We also note that under the FAITE the transferee, i.e. the seconded employee, for the duration of her or his secondment, is under the control of the appellant, and works under the appellant's directions. Yet, the fact remains that they are being loaned on a temporary basis by the Home company to the appellant. As per clause 1.6 of the FAITE executed by the appellant on 28-04-2001, the transferee's employment with the home company has only been made inactive, or in other words, it is not terminated and the transferee continues to retain his lien on his employment with the home company, even while it is inactive/suspended. The FAITE agreement executed on 25-07-2014 only defines the transferee as the person who is offered an employment with the host company and does not reveal his status qua the home company. Given the corresponding clause in the earlier agreement, merely because the current clause has stopped short of stating anything about the status of the transferee's employment with the home company, there is no reason to discard the inference that the transferee continues to retain his lien on his employment with the home 63 company and to infer to the contrary. Furthermore, the indisputable fact is that such secondment is a part of the Going global policy of the Home Company which the Host Company too is necessarily required to adopt and abide. On the cessation of the secondment period, they have to be repatriated in accordance with the said global policy governing the parties. Thus, the conspectus of the entire FAITE appears to indicate that even though there is a dual employer-employee relationship, one between the Home Company and the transferee and the other between the Host Company and the transferee, the employer-employee relationship between the Home company and the transferee overwhelmingly overshadows and looms large over the employer-employee relationship between the Host Company and the transferee, as the predominant relationship between the two simultaneously existing dual employer-employee relationship. We say so, for the reason that while the contracts are engineered to reflect operational control of the transferee with the Host Company while on secondment, the liability to pay the amounts as per the local laws governing social security contributions or pension contributions being made by the Home Company in its relationship with the transferee as the employee, coupled with the fact that the transferee apparently continues to retain his lien on his employment with the home company, even while it is inactive/suspended and further the fact that on the cessation of the secondment period, they have to be repatriated in accordance with the said global policy governing the parties, clinches the truth that the ultimate legal liability and responsibilities of an employer, towards the transferee as an employee, is always with the Home Company in so far as the transferee is concerned.

59. At this juncture, it would be relevant to reproduce the relevant paragraphs of the analysis and conclusions of the Honourable Apex Court in the Northern Operating Systems Pvt Ltd, which are as under:

"33. The issue which this Court has to decide is whether the overseas group company or companies, with whom the assessee has entered into agreements, provide it manpower services, for the discharge of its functions through seconded employees.

34. The contemporary global economy has witnessed rapid cross- border arrangements for which dynamic mobile workforces are optimal. To leverage talent within a transnational group, employees are frequently seconded to affiliated or group companies based on business considerations. 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 (of 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. The crux of the issue is the taxability of the cross charge, which is primarily based on who should be reckoned as an employer of the secondee. If the Indian company is treated as an employer, the payment would in effect be reimbursement and not chargeable to tax in the hands of the overseas entity. However, in the event the overseas entity is treated as the employer, the arrangement would be treated as service by the overseas entity and taxed."

Xxxxxxx

42. The assessee's contention before the CESTAT, inter alia, was that apart from it having control over the nature of work of the seconded employees, no consideration was charged by the foreign entities from it for providing the supply of manpower as the revenue alleged.

43. A plain reading of the definition of "manpower recruitment agency" (per Section 65(68) of the unamended Act) requires that to fall within that description,

(a) a person (the expression is not defined; however, by Section 3(42) of the General Clauses Act, the term includes "any company or association or body of individuals whether incorporated or not");

(b) provides service

(d) in any manner for recruitment or supply of manpower,

(e) temporarily or otherwise

44. The question is what are the services provided to the assessee, and by whom? Do they include the provision of services, through employees, by its overseas group companies or affiliates? After 1-7-2012, the definition of "service" underwent a change. Except listed categories of activities excluded from, or kept out of the fold of the definition, every activity virtually is "service". Now, by Section 65(44), "service" means

(a) any activity

(b) carried out by a person for another

(d) includes a declared service (the term "declared service" is defined in Section 66E).

45. Section 65(44), however, 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." The assessee contends that the secondment agreement has the effect of placing the overseas employees under its control, so to say, and enables it to require them to perform the tasks for its purposes. It emphasizes that the real nature of the relationship between it and the seconded employees is of employer and employee, and outside the purview of the service tax regime.

46. From the above discussion, it is evident, that prior to July, 2012, what had to be seen was whether a (a) person provided service (b) directly or indirectly, (c) in any manner for recruitment or supply of manpower (d) temporarily or otherwise. After the amendment, all activities carried out by one person for another, for a consideration, are deemed services, except certain specified excluded categories. One of the excluded categories is the 66 provision of service by an employee to the employer in relation to his employment.

47. 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. Thus, in State of Orissa v. Titaghar Paper Mills Co. Ltd. [1985 Supp SCC 280] it was held as follows :

"120. It is true that the nomenclature and description given to a contract is not determinative of the real nature of the document or of the transaction thereunder. These, however, have to be determined from all the terms and clauses of the document and all the rights and results flowing therefrom and not by picking and choosing certain clauses and the ultimate effect or result as the Court did in the Orient Paper Mills case (1977) 2 SCR 149)".

This principle was reiterated in Prakash Roadlines (P.) Ltd. v. Oriental Fire & General Insurance Co. Ltd. [(2000) 10 SCC 64].

48. The task of this Court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided - in that context

- by the overseas group company to the assessee.

49. A co-joint reading of the documents on record show that :

(i) Attachment 1 to the service agreement ensures that the overseas group company assigns, inter alia, certain tasks to the assessee, including back office operations of a certain kind, in relation to its activities, or that of other group companies or entities;

(ii) The assessee is paid a markup of 15% of the overall expenditure it incurs, by the overseas company (clause 2, read with attachment 1 of the Service Agreement);

(iii) By the Secondment Agreement, the parties agree that the overseas employee is temporarily loaned to the assessee (Article I read with the Schedule);

(iv) During the period of secondment, the assessee has control over the employee, i.e. it can require the seconded employee to return, and likewise, the employee has the discretion to terminate the relationship (Article II);

(v) The overseas employer (group company) pays the seconded employee, which is reimbursed to the overseas company, by the assessee (Article III);

(vi) The assessee is responsible for the work of the seconded employee, i.e., the overseas employer, during the secondment period, is absolved of any liability for the job or work of its seconded employees (Article VII);

(vii) The secondment is for a specified duration, and the employment with the assessee ceases upon the expiration of that period (Article II of the secondment agreement and the "Duration" clause in the letter of understanding with the seconded employee);

(viii) The letter of understanding issued to the seconded employee specifies that the tenure with the assessee is an assignment (in one place, the term used is "At its conclusion, repatriation will be in accordance with the Global Mobility Repatriation Policy");

(ix) The terms include the salary payable as well as other allowances, such as hardship allowance, vehicle allowance, servant allowance, paid leave, housing allowance, etc. The nature of salary and other perks underscore the fact that the seconded employees are of a certain skill and possess the expertise, which the assessee requires.

50. The above features show that the assessee had operational or functional control over the seconded employees; it was potentially liable for the performance of the tasks assigned to them. That it paid (through reimbursement) the amounts equivalent to the salaries of the seconded employees - because of the obligation of the overseas employer to maintain them on its payroll, has two consequences : one, that the seconded employees continued on the rolls of the overseas employer; two, since they were not performing jobs in relation to that employer's business, but that of the assessee, the latter had to ultimately bear the burden. There is nothing unusual in this arrangement, given that the seconded employees were performing the tasks relating to the assessee's activities and not in relation to the overseas employer. To put it differently, it would be unnatural to expect the overseas employer to not seek reimbursement of the employees' salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business. 68

51. As discussed previously, 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. This Court has consistently applied one test: substance over form, requiring a close look at the terms of the contract, or the agreements.

52. A vital fact which is to be considered in this case, is that the nature of the overseas group companies business appears to be to secure contracts, which can be performed by its highly trained and skilled personnel. This business is providing certain specialized services (back office, IT, bank related services, inventories, etc.). Taking advantage of the globalized economy, and having regard to locational advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimize the economic edge (be it manpower or other resources availability) to perform the specific tasks given it, by the overseas company. As part of this agreement, a secondment contract is entered into, whereby the overseas company's employee or employees, possessing the specific required skill, are deployed for the duration the task is estimated to be completed in. This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the purpose of completion of the assessee's job, amounts to manpower supply.

53. Facially, or to put it differently, for all appearances, the seconded employee, for the duration of her or his secondment, is under the control of the assessee, and works under its direction. Yet, the fact remains that they are on the pay rolls of their overseas employer. What is left unsaid - and perhaps crucial, is that this is a legal requirement, since they are entitled to social security benefits in the country of their origin. It is doubtful whether without the comfort of this assurance, they would agree to the secondment. Furthermore, the reality is that the secondment is a part of the global policy - of the overseas employer loaning their services, on temporary basis. On the cessation of the secondment 69 period, they have to be repatriated in accordance with a global repatriation policy (of the overseas entity).

54. The letter of understanding between the assessee and the seconded employee nowhere states that the latter would be treated as the former's employees after the seconded period (which is usually 12-18 months). On the contrary, they revert to their overseas employer and may in fact, be sent elsewhere on secondment. The salary package, with allowances, etc., are all expressed in foreign currency (e.g., US $ 330,000/- per annum in the letter produced before Court, extracted above). Furthermore, the allowances include a separate hardship allowance of 20% of the basic salary for working in India. The monthly housing allowance in the specific case was ` 3,66,700. In addition, an annual utility allowance of ` 3,97,500/- is also assured. These are substantial amounts, and could have been only by resorting to a standardized policy, of the overseas employer.

55. The overall effect of the four agreements entered into by the assessee, at various periods, with NTS or other group companies, clearly points to the fact that the overseas company has a pool of highly skilled employees, who are entitled to a certain salary structure - as well as social security benefits. These employees, having regard to their expertise and specialization, are seconded (a term synonymous with the commonly used term in India, deputation) to the concerned local municipal entity (in this case, the assessee) for the use of their skills. Upon the cessation of the term of secondment, they return to their overseas employer, or are deployed on some other secondment.

56. This Court, upon a review of the previous judgment in Sushilaben Indravadan (supra) held that there no one single determinative test, but that what is applicable is "a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight."

57. Taking a cue from the above observations, while the control (over performance of the seconded employees' work) and the right to ask them to return, if their functioning is not as is desired, is 70 with the assessee, the fact remains that their overseas employer in relation to its business, deploys them to the assessee, on secondment. Secondly, the overseas employer - for whatever reason, pays them their salaries. Their terms of employment - even during the secondment - are in accord with the policy of the overseas company, who is their employer. Upon the end of the period of secondment, they return to their original places, to await deployment or extension of secondment.

58. One of the arguments of the assessee was that arguendo, the arrangement was "manpower supply" (under the unamended Act) and a service [(not falling within exclusion (b) to Section 65(44)] yet it was not required to pay any consideration to the overseas group company. The mere payment in the form of remittances or amounts, by whatever manner, either for the duration of the secondment, or per employee seconded, is just one method of reckoning if there is consideration. The other way of looking at the arrangement is the economic benefit derived by the assessee, which also secures specific jobs or assignments, from the overseas group companies, which result in its revenues. The quid pro quo for the secondment agreement, where the assessee has the benefit of experts for limited periods, is implicit in the overall scheme of things.

59. As regards the question of revenue neutrality is concerned, the assessee's principal contention was that assuming it is liable, on reverse charge basis, nevertheless, it would be entitled to refund; it is noticeable that the two orders relied on by it (in SRF and Coca Cola) by this Court, merely affirmed the rulings of the CESTAT, without any independent reasoning. Their precedential value is of a limited nature. This Court has been, in the present case, called upon to adjudicate about the nature of the transaction, and whether the incidence of service tax arises by virtue of provision of secondment services. That a particular rate of tax - or no tax, is payable, or that if and when liability arises, the assessee, can through a certain existing arrangement, claim the whole or part of the duty as refund, is an irrelevant detail. The incidence of taxation, is entirely removed from whether, when and to what extent, Parliament chooses to recover the amount.

60. This Court is also of the view, for similar reasons, that the orders of the CESTAT, affirmed by this Court, in Volkswagen and 71 Computer Sciences Corporation, are unreasoned and of no precedential value.

61. In view of the above discussion, it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued)."

60. The Appellant attempts to distinguish the aforesaid judgement in Northern Operating Systems case, stating as under:

a. In the case of Northern Operating Systems (supra), the assessee was engaged in providing back-office services to the overseas Company. For performing such services, the overseas company sends the employees to the assessee, who in turn are actually performing the services for the overseas Company's business. This was a vital fact in deciding that there was manpower supply service in the case of Northern Operating Systems (supra). However, in the present case, the employees are deployed to India do not undertake any specific task, resulting in supply of services back to the foreign company. Instead, the employees seconded by Daimler AG hold positions which are solely concerned with the business operations in India. This is a crucial distinguishing factor between the facts of the instant case and the judgment of this Hon'ble Court in the case of Northern Operating Systems (supra).

b. In Northern Operating Systems (supra), the entire salary and emoluments were paid by the Foreign Company to the employee and later paid by assessee to Foreign Company. However, in the present case the obligation to pay the salary rests solely with the Appellant. For administrative convenience, only part of the salary is paid by Daimler AG on behalf of the Appellant, which is later reimbursed on cost-to- cost basis by the Appellant.

c. In Northern Operating Systems (supra), the foreign Company had created a pool of employees who are deployed to various affiliate companies to perform tasks in relation to 72 business of the foreign group entity. However, there is no such pool of employees created in the present case and employees are engaged in relation to business of the Appellant and not the foreign Company.

d. The judgment in Northern Operating Systems Pvt. Ltd. (supra) does not provide that all the secondments will amount to provision of Manpower Recruitment and Supply Agency Service, instead it clearly provides that one has to examine the nature of the contract, terms of the agreement and activity performed by the seconded employees and the relationship between the seconded employee, Indian Company and the foreign company to arrive at a conclusion in every case, whether this amounts to employment or not.

Reliance is placed on the Circular issued by CBIC in Instruction No. 05/2023 dated 13.12.2023 which clearly states the decision in Northern Operating Systems is based on the unique characteristics of the specific arrangement therein and cannot be applied mechanically to all cases of secondment transactions.

61. The distinction sought to be highlighted that in the NOS case the overseas company sends the employees to the assessee, who in turn are actually performing the services for the overseas Company's business, was discounted by the Apex Court after noticing the same in paragraph 52, by stating that "This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the purpose of completion of the assessee's job, amounts to manpower supply." Be that as it may, the contention of the appellant that "in the present case, the employees are deployed to India do not undertake any specific task, resulting in supply of services back to the foreign company. Instead, the employees seconded by Daimler AG hold positions which are 73 solely concerned with the business operations in India", remains just that - an averment, sans evidence. It may also not be out of place to note that despite the FAITE in the preamble stating that the parties are engaged in reciprocal business transactions involving transfer of certain staff employed by the respective party, for whatever reasons, the Appellant has not chosen to provide with the appeal records the Going Global Policy or the Global mobility policies or the detailed appointment letter issued by the appellant to the transferee at the time of joining or any other evidence to substantiate the said contention that in the present case the employees deployed to India do not undertake any specific task, resulting in supply of services back to the foreign company and that the employees seconded by Daimler AG hold positions which are solely concerned with the business operations in India. When the FAITEs itself in its clauses reproduced supra state unambiguously that ""The parties agree to transfer or otherwise make available employees/transferees on the basis of the framework agreement in conjunction with the separate employment contract for each transferee. The host company examined the Daimler Going Global Policy and the Global Mobility Policies and found that these policies are appropriate for the host company for transfers under this agreement and the host company introduces the Going Global Policy and the Global Mobility Policies in its latest version as its own company policy. Host company shall not amend that policy unless otherwise agreed". We are unable to fathom why the appellant has chosen to refrain from producing these documents despite these frame work agreements being found appropriate by the host company and being adopted by the host company as its own company policy and when the transfers are all governed by these 74 policies as well as the detailed appointment letter being issued to the transferees. These documents may also have contributed in understanding the underlying reasons behind the FAITE, not to mention their impact on the Home Company and the Host Company in the context of such transfer of employees, in a much more detailed manner. In any event, the appellant has chosen to refrain from producing these documents for reasons best known to the appellant.

62. As regards the contention that "in Northern Operating Systems (supra), the foreign Company had created a pool of employees who are deployed to various affiliate companies to perform tasks in relation to business of the foreign group entity, and that there is no such pool of employees created in the present case and employees are engaged in relation to business of the Appellant and not the foreign Company", again the same remains an averment sans any evidence given the absence of the going global policy or the global mobility policies as well as the detailed appointment letter of the employee. In any event, in our view, irrespective of whether a pool is created or not, the fact remains that it is the Home Company, who upon receiving the specification of the employee desired by the Appellant, determines the transferee who is to be made available by indicating the current salary and family status of the transferee. Thus, this distinction sought to be pointed out is rather rendered immaterial as the factum remains that who would be the transferees who are offered to be supplied, are only chosen as decided by the Home Company.

63. We also notice that the FAITE as well as the separate contract agreement is silent whether the appellant shall have the sole right or even the right to take punitive steps against misconduct, negligence, fraud or unsatisfactory performance of work by the transferred employee while performing the tasks under the appellant. It is only the length of the contract provided in the separate contract for employment which while stipulating the period as 3 years with the first year locked in, however provides that either side can terminate the same with a notice period of three months. It is also relevant that unlike an employer-employee contract where the employer can terminate the employment of the employee in case of contumacious conduct, uninfluenced by any other entity, in the appellant's case, the Home Company can at best terminate the contract of employment of the transferee after prior notice and in consultation with the Home Company, but do not have any control on whether or not the Home Company should terminate the employment of the transferee. Pertinently, the parties agree to transfer or otherwise make available the transferee on the basis of FAITE, in conjunction with the separate employment contract for each transferee (clause 2.2 of FAITE). However, the host company may only recommend changes of the transferee's employment status including his/her position or function as well as the conditions of any contract applying to international transfer, and the recommended changes have to be mutually agreed between home and host company (Clause 7.2 of FAITE). Also, the appellant as host company is not only stated to have examined the "Daimler Going Global Policy" and found that this policy is appropriate for the appellant for transfers under this agreement, but also that the Appellant introduces the Going Global Policy in its version of 76 01.01.2008 as its own company policy ("Going Global Policy"). The appellant shall not amend that policy unless otherwise agreed (clause 2.2 of FAITE). Further it is also seen that under clause 7.3 of the FAITE that the Home Company reserves the right to call the transferee back to the home company on short notice, all of which clearly indicate that the transferee is under the real control of the Home Company who is transferring them on a temporary basis and the appellant has next to nil discretion in suo motu altering the terms of employment contract of the transferee, thereby also negating the appellant's contention of an independent or standalone employer- employee relationship. In fact, the appellant does not have any leeway to act on its own accord to transfer the transferee to suitable other duties or in fact even to transfer to any other duty station. Any such transfer or change of duties is contingent on its acceptability both to the Home Company and also the transferee, which indicates that the sway of the Home Company, and its say as to where the transferee would work and what duties the transferee would undertake, are not insignificant. Thus, while the fragmented control structure obfuscates the limits of disciplinary control and enforceability for violation of contractual obligations that can be exercised by the Home Company under the Home Company policy while the transferee is with the Host Company, nevertheless, the silence on certain aspects in FAITE and the separate contract employment of the transferee, as well as the limitations on termination of employment, as observed supra along with the fall back on the Daimler Going Global Policy which is introduced by the Appellant as its Going Global Policy, adds heft to our view that the true and real control over the transferee is always with the Home Company.

64. We are disinclined to treat the absence of any mark up as absence of consideration for the services of the seconded employees. At best, it indicates a possible lack of directly relatable financial benefit. However, the indirect benefits that the Host Company derives from the skill sets and expertise of the transferees resulting in improved and efficient performances through the transfer or application of the unique knowledge/skills/expertise that the transferees have developed while being with the Home Company, is not something that can be ignored. It is precisely the securing of such benefits that motivates the Host Company to seek secondment of employees from the Home Company and for the said purpose take on the liability including recoupment of the social security benefits, retirement contributions etc. In such circumstances the recoupment of the employee's expenses by the Host Company, which expenses were otherwise being borne by the Home Company, becomes the consideration for such supply of transferees to perform the duties in relation to the Host company's business. The conclusions of the Apex Court that "it would be unnatural to expect the overseas employer to not seek reimbursement of the employees' salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business" as well as the observation that "It is doubtful whether without the comfort of this assurance, they would agree to the secondment" bears heavily on our minds in this context.

65. The Supreme Court, has observed that there is no single determinative factor for deciding whether a contract is for service or a contract of service. Distinctiveness of each case demands an 78 evidence based examination and it no doubt appears attractive to strike out a different path based on factual aspects disregarding precedents. Yet, three factors that evidently has weighed with the Apex Court in the NOS Judgement to hold that the assessee therein was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service are, (1) the lien on employment, i.e., the transferees/secondees continuing to be in the employment of the overseas employer as is evident from their return to them after completion of the secondment tenure, (2) the service rules of the overseas entity governing the transferee's terms of employment, even during the secondment, which are in accord with the policy of the overseas entity and (3) the salary package offered by the Host Company being based on what the transferee was earning while he was with the Home Company. This has led to the Honourable Apex Court holding that the overseas entity remains the employer and thus, concluding that there is a provision of manpower supply services from the overseas entity to the Indian entity, taxable under erstwhile service tax law. To our mind, when these three factors exist in a case, no lower court or authority can then take a different stand contrary to the NOS Judgement. These three factors are evidently in existence even in the appellant's case herein as analysed in our discussions supra. Further, not every factor elucidated by the Supreme Court holds equal relevance or would weigh equally when considering individual agreements in different cases. Yet, when there are factors that have weighed with the Apex Court to pigeonhole secondment by the overseas company as provision of manpower supply service, thereafter, as a Tribunal, we are hardly at liberty to distinguish the same as inconsequential 79 factors, or accord less weightage, and then to depart from the Judgement of the Honourable Apex Court.

66. Therefore, we respectfully defer to the wisdom of the Honourable Apex Court that has consciously chosen to apply the substance over form test mandating a close look at the terms of the contract, or the agreements while interpreting such contracts of transfer/employment. Thus, on a careful scrutiny of the FAITE as well as the separate employment contract issued to the transferee in conjunction with the FAITE, as elucidated supra, we do not find any substantial difference from the facts stated in the judgement of the Honourable Supreme Court in the case of Northern Operating Systems Pvt Ltd.

67. At this juncture, we also notice that the appellant has questioned the tenability of the demand contending that there is an absence of consideration when the Home Company transfers the transferee to the Host Company, placing reliance inter-alia on the decisions in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, 2013 (29) STR 9 (Del) upheld by the Hon'ble Supreme Court in Intercontinental Consultants and Technocrats Pvt Ltd, 2018 4 SCC 669, as well as the decision of this Tribunal in Principal Commissioner of Central Goods and Service Tax, Delhi south Commissionerate v Boeing India Defense Pvt Ltd, 2023 (5) TMI 523-CESTAT, New Delhi and couple of other decisions as have been reproduced above.

68. The Appellant had placed reliance on Principal Commissioner of Central Goods and Service Tax Delhi South Commissionerate v. Boeing India Defense Pvt Ltd., 2023 (5) TMI 523 -CESTAT 80 New Delhi (also referred herein as the Boeing India Defense case or Boeing India Defense decision) of the Tribunal cited supra for the contention that the said Judgement had extended the benefit of the decision in Intercontinental Consultant's case to the assessee therein on the aspect of reimbursable expenses. While stating thus, it was also emphasized that the fact circumstances in the Boeing India Defense case are identical to Northern Operating Systems. It was also submitted that that Boeing India Defense case was affirmed by the Apex Court. At the outset, we emphasize that on fact circumstances of the appellant's case we have already held that when the liability itself being that of the Home Company as the actual payer is being so discharged by the Home Company, the said amount being paid by the Host Company, i.e. the appellant, is only in fulfilment of its liability to pay the COSTS of the transfer of the transferee and is not a reimbursement but a recoupment of the said payment, as the liability to pay these amounts as per the local laws governing such social security contributions or pension contributions being made by the Home Company in its relationship with the transferee as the employee was, is, and has always been with the Home Company, and it was never on the Host Company in the first place. We have also further held that for the aforesaid reasons, we are unable to subscribe to the appellant's contention that such payments of social security amounts by the Home Company was on behalf of the appellant and that too in the capacity of an agent of the appellant. Therefore, the judgements pertaining to reimbursable expenses are wholly inapplicable in the context of the appellant's case.

69. Be that as it may, we note that the decision in Boeing India Defense cited supra, while noting the Judgement of the Apex Court in NOS systems, has not given any reasons as to why it was not adhered to on the issue of applicability of Intercontinental Consultants Judgement, though the Apex Court had noticed the said Intercontinental Consultants Judgement in its Judgement in NOS Systems. Thus, if a view is being taken that the Judgement in NOS systems is not to be adhered to, equally, there ought to have been reasons as to why the NOS systems Judgement of the Apex Court is not binding, which we notice is not forthcoming in the decision of this Tribunal in the Boeing India Defense cited supra. That apart, we also note that a decision of the Chennai Bench of this Tribunal in Nissan Motors India Pvt Ltd v. Commissioner of GST and Central Excise, consequent to a difference of opinion and reference to Third Member, in Final Order Nos.41473-41475/2024, had considered the decision in Boeing India Defense Pvt Ltd as well as Northern Operating Systems and had decided the lis, placing reliance on the decision in Northern Operating Systems. While the fact that Boeing India Defense case was affirmed by the Apex Court, albeit on the ASG's submission that the issues which arose in those appeals are covered by the judgment of this Court in Union of India v. Intercontinental Consultants & Technocrats (P.) Ltd, no doubt went unnoticed in the Nissan Motor case supra, that in itself would not allow us, sitting in a division bench, to hold that it would render the said decision in Nissan Motors suspect, given that it has the status of a decision emanating from a larger bench sitting en banc (Larsen & Toubro Ltd. Vs CST, Delhi, 2013-TIOL-1458-CESTAT-DEL, refers). Yet another pertinent aspect that we take cognizance of is that the decision of this Tribunal in Boeing India Defense case was 82 affirmed by the Apex Court based on the consent of the ASG. It is a settled principle of law that observations made in Judgements premised on consent do not create any binding precedent. If any authority is required for the said proposition, Kulwant Kaur and Ors. v. Gurdial Singh Mann (Dead) by Lrs. and Ors., 2001 INSC 158: (2001) 4 SCC 262, in no uncertain terms has held that a decision based on a concession is not a binding precedent. Even otherwise, it is also pertinent that the dispute in Boeing case before the Tribunal centered on the expenditure towards hotel stay, school tuition fees etc. as can be seen from para 2 therein where it is stated "Pursuant to service tax audit by the department, the impugned show cause notice was issued demanding service tax on the expenditure incurred towards hotel stay, school tuition fees for the disputed period considering the same as part of the consideration paid for import of manpower services from April 2015 to June 2017", and therefore the reliance placed on the said decision which is in the context of reimbursement benefit extended in the facts and circumstances of that case, may not be apt.

70. In any event, we are of the view that the decision in the Boeing India Defense case of the division bench of this tribunal is not of any great import, and is rather rendered inconsequential, when it is beyond the pale of any controversy that the Apex Court itself in the NOS Judgement has directly considered the aforecited Intercontinental Consultants Judgement. The effect of such consideration of the Intercontinental Consultant Judgement by the Apex Court in the NOS Judgement is further dwelt upon infra. We find that the other decisions relied upon by the appellant in this context also turn on the peculiar facts and circumstances therein 83 which are different from that of Northern Operating Systems as well as that of the appellant's facts and circumstances. We note that, the decisions in Kou-chan Knowledge Convergence v CST, Bengaluru and CCE & ST, Patna v. Inductus, do not pertain to secondment of employees from overseas company to an Indian Company. Therefore, all these decisions are thus distinguishable as inapplicable in the instant case. In the interest of avoiding prolixity, we deem it unnecessary to separately elaborately address each cited case law to distinguish the same on the peculiar factual paradigm thereof.

71. We find that the appellant's pleas as in this instance, regarding applicability of the decision of the Apex Court in Intercontinental Consultants case, was also made by the assessee in Northern Operating Systems, which though reproduced in para 50 of this order supra, nevertheless for sake of clarity, is reproduced yet again as under:

"26. It was next urged that service tax is leviable only on the gross amount charged for the provision of service. It was argued that assuming but not admitting that service is provided by the group companies to the assessee, it cannot be said that the value of consideration for that service is the amount of salaries paid to the expats. To determine value of taxable services for charging Service Tax, gross amount charged for providing the services is to be determined. Reliance is placed on the judgment of the Delhi High Court in Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India [2013 (29) S.T.R. 9 (Del.)], which held that Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 goes beyond the mandate of Section 67 of the Finance Act, 1994 as 84 quantification of the value of the service can never exceed the gross amount charged by the service provider for the service provided by him. This position was upheld by this Court in Intercontinental Consultants and Technocrats Pvt. Ltd. [(2018) 4 SCC 669 = 2018 (10) G.S.T.L. 401 (S.C.)]. In the present case, the demand of the service tax is being computed on the salaries and allowances paid to the employees. The salaries cannot be said to be consideration paid to group companies for provision of service and thus such demand (of service tax in lieu of salaries), is untenable. Therefore, any cost or expense reimbursed does not represent the gross value of taxable service and cannot be a consideration for charging service tax."

72. These contentions are seen addressed by the Honourable Supreme Court in its Judgement in Northern Operating Systems as under:

"59. As regards the question of revenue neutrality is concerned, the assessee's principal contention was that assuming it is liable, on reverse charge basis, nevertheless, it would be entitled to refund; it is noticeable that the two orders relied on by it (in SRF and Coca Cola) by this Court, merely affirmed the rulings of the CESTAT, without any independent reasoning. Their precedential value is of a limited nature. This Court has been, in the present case, called upon to adjudicate about the nature of the transaction, and whether the incidence of service tax arises by virtue of provision of secondment services. That a particular rate of tax - or no tax, is payable, or that if and when liability arises, the assessee, can through a certain existing arrangement, claim the whole or part of the duty as refund, is an irrelevant 85 detail. The incidence of taxation, is entirely removed from whether, when and to what extent, Parliament chooses to recover the amount.

60. This Court is also of the view, for similar reasons, that the orders of the CESTAT, affirmed by this Court, in Volkswagen and Computer Sciences Corporation, are unreasoned and of no precedential value.

61. In view of the above discussion, it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued)." (emphasis supplied).

73. The Ld. Counsel appearing for the appellant has emphasized on the highlighted part of para 59 of the judgement reproduced supra, to contend that the Honourable Supreme Court has not rendered a decision on this aspect and therefore, it is open to this Tribunal to decide whether the demand would sustain given the appellant's contention's on revenue neutrality/entitlement to refund.

74. The contention though attractive at the first blush, cannot be countenanced for the fact that the Honourable Apex Court, has gone on to not only state in the said para that "a particular rate of tax

- or no tax, is payable, or that if and when liability arises, the assessee, can through a certain existing arrangement, claim the whole or part of the duty as refund, is an irrelevant detail", but thereafter to hold in the next paragraph 60 that "for 86 similar reasons, that the orders of the CESTAT, affirmed by this Court, in Volkswagen and Computer Sciences Corporation, are unreasoned and of no precedential value"

and then again in para 61 that "it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question."

75. Pertinently, it is to be noted that the Apex Court in the Northern Operating Systems Judgement has not stated that the matter is being remitted back to adjudge the liabilities. Instead, the Lordships of the Honourable Supreme Court in the NOS Judgement had taken cognizance of the said pleas premised on the intercontinental case as well as the plea of revenue neutrality and has, after discussions, stated their Lordships' conclusions as under:

"Conclusions

65. It is held, for the foregoing reasons, that the 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. Furthermore, in view of the above discussion, the invocation of the extended period of limitation in both cases, by the revenue is not tenable.

66. In light of the above, the revenue's appeals succeed in part; the assessee is liable to pay service tax for the periods spelt out in the SCNs. However, the invocation of the extended period of limitation, in this Court's opinion, was unjustified and 87 unreasonable. Resultantly, the assessee is held liable to discharge its service tax liability for the normal period or periods, covered by the four SCNs issued to it. The consequential demands therefore, shall be recovered from the assessee.

67. The impugned common order of the CESTAT is accordingly set aside. The Commissioner's orders-in-original are accordingly 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 now be modified, excluding any liability for the extended period of limitation.

68. The appeals are partly allowed, to the above extent, with no order on costs." (emphasis supplied)

76. To our mind, evidently, the Honourable Apex Court has considered the plea of revenue neutrality and found it to be irrelevant in the context of determining not only whether the liability has arisen, but also whether it has to be discharged, when it has, in no uncertain terms, not only held that such liability has to be necessarily discharged, but also held that consequential demands therefore, shall be recovered from the assessee, as can be seen from para 66 of the Judgement reproduced supra. Thus, when the entitlement to availment of credit or entitlement to refund etc., would arise only subsequent to the discharge of such revenue liability in the first instance; such availment of cenvat credit or entitlement to refund also being subjected to further checks and balances in terms of the statutory requirements that has to be fulfilled to qualify for the same, the Honourable Apex Court, has decided not to entertain the plea of revenue neutrality when holding that the liability has to be 88 necessarily discharged. The appellant has also placed reliance on a number of decisions to contend that the entitlement to cenvat credit results in a revenue neutral situation and thus the demand need not be sustained. The crucial distinction that we note is that in all these decisions, the fact situation was not pertaining to the liability that arises consequent to the levy attracted under Section 66A of the Finance Act, 1994 for import of service. To countenance the plea of the appellant would be to render the discharge of liability consequent to levy under Section 66A, completely otiose, as no person who is liable thus need to pay service tax on service received from abroad for the reason that the tax so paid will be available as credit to them. As we have observed supra, when the entitlement to availment of credit or entitlement to refund etc., would arise only subsequent to the discharge of such revenue liability in the first instance; such availment of cenvat credit or entitlement to refund also being subjected to further checks and balances in terms of the statutory requirements that has to be fulfilled to qualify for the same, the liability to pay the service tax consequent to the levy attracted under Section 66A cannot be extinguished on the plea of revenue neutrality. We are fortified in our view on this aspect by the coordinate bench decision of this Tribunal in M/s. Prithvi information Solutions v Commissioner of Central Tax Rangareddy-GST, 2025 (2) TMI 901-CESTAT Hyderabad .

77. In any event, when the Hon'ble Apex Court has held in the Northern Operating Systems that the Appellant therein was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, and has confirmed the demand for the normal 89 period, after discussions on the contentions advanced relying in intercontinental consultants case as well on revenue neutrality, it is not for this Tribunal to hold that the aspect of revenue neutrality has not been considered by the Honourable Apex Court, and to then deviate therefrom. Depending on the perspective of the litigating rival parties, adherence to judicial discipline may be a boon or a bane, a millstone, or the sheet anchor, and the outcome may be propitious or a vicissitude to be weathered. This Tribunal had an occasion to analyze the salutary principles of judicial discipline, binding precedent, ratio decidendi, obiter dicta and the Doctrine of Stare Decisis in extenso in a decision in Motonic India Automotive Pvt Ltd v. Commissioner of GST &Central Excise, Chennai rendered by Final Order No.40498/2025 dated 06-05-2025 in Excise Appeal No.42207 of 2017. Therefore, to our mind, it remains a principle to abide by, unwaveringly, implicitly, and unquestioningly, which we hereby do.

78. We thus find that when the plea based on the Intercontinental Consultant Judgement as well as the plea on revenue neutrality advanced by the appellant had also been advanced by the assessee in the Northern Operating Systems case and the contentions were negated by the Honourable Apex Court as elaborated in the reproduction of the relevant paragraphs supra, the very same finding of the Honourable Apex Court would also inexorably apply in the instant case. Therefore, we hold that the contentions of the appellant on these counts are wholly untenable.

79. However, while the plea based on the Intercontinental Consultant Judgement as well as the plea on revenue neutrality considering the 90 entitlement to avail cenvat credit, though considered by the Honourable Supreme Court, has clearly not found favour with the Honourable Supreme Court; nevertheless, on the issue of invocation of the extended period of limitation, we find that the Honourable Supreme Court had decided the issue in favour of the assessee in the NOS Judgement.

80. In the light of our analysis and discussions above, in asmuch as we have also found that the inferential and logical links that flow from the various clauses of the FAITE and the separate employment contract that has been issued in conjunction with the FAITE, when read conjointly, clearly indicate that the instant case is substantially similar to the fact circumstances of Northern Operating Systems, we hold that the said Judgement is squarely applicable to the facts and circumstances of these appeals. Accordingly, we find that the Appellant was the service recipient for service (of manpower recruitment and supply services) by the overseas entity, in regard to the transferees/employees it seconded to the appellant, for the duration of their deputation or secondment. Therefore, we hold that Daimler AG is providing Manpower Recruitment and Supply Agency Services to the Appellant under Section 65(105)K of the Finance Act, 1994 prior to 01-07-2012 and is providing taxable services under Section 65B(44) of the Finance Act, 1994 post 01-07-2012, and consequently the Appellant is liable to pay service tax under Section 66A of the Act ibid read with applicable provisions of Service Tax Rules and Place of Provision Rules.

81. We also hold that the view held by the appellant about its liability was debatable and was so held by the appellant without any mala 91 fide. We do not find the existence of "wilful suppression" of facts, or deliberate misstatement in these instances. For these reasons, we hold that the Revenue was not justified in invoking the extended period of limitation to fasten liability on the appellant.

82. Therefore, respectfully following the said Judgement of the Honourable Supreme Court in the case of Northern Operating Systems, reported in (2022) 17 SCC 90 : 2022 (61) G.S.T.L 129 (SC), we uphold the impugned common Orders-in-Original Nos.04-08/2019 (STA-1) dated 27.06.2019, except to the extent it seeks to recover amounts for the extended period of limitation and imposes penalties. The penalties imposed are set aside. The demands now stand modified excluding any liability for the extended period of limitation and the demands are confined only to the normal period, along with applicable interest thereon. The appeals stand disposed of in the above terms.

(Order pronounced in the open court on 02.07.2025) (AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) psd

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Daimler India Commercial Vehicles Pvt ... vs Commissioner Of Gst&Cce(Chennai ... on 2 July, 2025