Order Date – 15 June 2023

Parties: M/s. Renault Nissan Automotive India Pvt. Ltd. Vs The Commissioner of G.S.T. and Central Excise

Facts – 

• The Appellant, M/s. Renault Nissan Automotive India Pvt. Ltd., has entered Secondment Agreement (SA) with M/s Nissan Motor Company Ltd., Japan (‘NMC’) for obtaining employees.
• A show cause notice was issued proposing demand of service tax alleging that the secondment would fall within the definition of “manpower recruitment or supply agency” service under Section 65(68) of the Finance Act, 1994 since providing supply of manpower service temporarily or otherwise would be covered under the above definition.
• The demand was confirmed.

Issue – 

• Whether the salary and other benefits provided to the secondees by the appellant are includible in the taxable value?

Order –

• The Tribunal observed that in terms of the agreement between the parties, where ‘salary, bonus and others’ have been provided for, it is clear that it is for the appellant to pay the salary, bonus, perks, etc., to the secondees working for it in India, and there is also no dispute that the above clauses of the agreement are binding on both the parties.
• It is thus clear that what is paid is towards the cost incurred for making available the service which the appellant has received. Further, in terms of the definition under Section 67 ibid., ‘consideration’ would include any amount that is payable for the taxable services provided or to be provided and thus, there is no doubt that what is provided by M/s. NMC is nothing but manpower recruitment service.
• It was held that the appellant is required to pay applicable Service Tax for the normal period along with interest. However, there is no suppression of facts involved and that being the case, the penalties imposed are set aside.
• The appellant’s claim as to this case being revenue neutral, deserves merit, for which reason the extended period of limitation cannot be invoked. Further, even on the issue of limitation, following the decision in the case of M/s. Northern Operating Systems Pvt. Ltd. it was held that the demand, if any, would survive only for the normal period.