2026-VIL-147-KAR
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SGST High Court Cases

GST – Secondment of employees, Taxability of Remuneration Paid to Foreign National – Demand of IGST on the remuneration paid to its foreign national employees, on the ground that the payment of such remuneration amounts to "Import of Manpower Recruitment and Supply Services" from the foreign employees - Whether the remuneration paid by the petitioner to its foreign national employees is subject to IGST under the GST law – HELD – The present case is not one of secondment of employees from other entities in the group; in fact, there exists a direct employer-employee relationship between the Petitioner and the foreign nationals/ employees - The payment of salary to the foreign national employees by the petitioner does not attract IGST, as the transaction is covered under Entry 1 of Schedule III of the CGST Act, 2017 - There exists a valid employer-employee relationship between the petitioner and the foreign nationals, as evidenced by the employment contracts, the payment of salaries and other benefits, and the deduction of applicable income tax. When the foreign nationals are treated at par with the Indian employees of the petitioner, the respondents cannot treat them differently – Further, the foreign national employees do not qualify as "Non-resident Taxable Persons" in terms of Section 2(77) of the CGST Act, as they have a fixed place of business and residence in India and are not making occasional supplies, particularly when the location of supplier is in India and consequently, the conditions under Section 2(11) of the IGST Act also not being fulfilled, thereby meaning that the subject transaction is not that of import – The issue involved in the present petition is completely settled by virtue of CBIC Circular No. 210/4/2024-GST dated 26.06.2024, clarifies that in cases where the supply is between related parties and the recipient is eligible for full input tax credit, the taxable value shall be deemed to be 'Nil' if no invoice is raised - The petitioner is not liable to pay IGST on the remuneration paid to its foreign national employees. The impugned show cause notice and all further proceedings pursuant thereto are quashed and the writ petition is allowed
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