Karnataka HC Rules Employee Secondment Not Taxable Under GST, Sets Aside Revenue Demand

• Karnataka High Court ruled that secondment of employees is not taxable under GST.
• Supreme Court previously ruled secondment as taxable manpower service based on specific facts.
• Each secondment case should be evaluated individually considering control, posting nature, salary payment, and return to foreign entity.
• Present case showed a genuine employer-employee relationship, excluding it from taxable supply under GST Act.
• Circular clarifies that if no invoice is issued, the value of services is deemed ‘Nil’ and not taxable.
• High Court held no tax liability in this case, setting aside the demand by Revenue.
• Ruling suggests Indian salary and perquisites may not be taxable if full ITC is available.
• High Court did not clearly distinguish this case from the Supreme Court’s decision.
• Supports Delhi High Court’s view on using zero value for related party transactions with full ITC.

Source: ey.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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