2026-VIL-1016-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Secondment of employee, Reimbursable Salary Expenses - Service tax liability on technical services provided under secondment agreement and segregation of reimbursable salary components - Appellant company entered into a secondment agreement with its foreign holding company for supply of qualified technical personnel. The holding company deployed personnel who continued as regular employees on the parent company's payroll - Whether the entire amount paid under a secondment agreement for technical services is liable to service tax, or whether the reimbursable salary component of employee costs can be excluded from service tax liability – HELD - While service tax is payable on the technical assistance and services received from the foreign holding company as a commercial transaction governed by the RCM, the component comprising reimbursable salary expenses paid to employees is not liable to service tax - The secondment agreement does constitute a taxable service involving technical assistance and commercial exchange of benefits between the parties. However, the salary reimbursement portion, being a direct employee cost passed through without any service element, falls outside the taxable service. Since the entire payment was transparently documented through the agreement placed on record, there is no evidence of suppression of facts warranting an extended period of limitation; therefore, the demand is restricted to the normal assessment period - The demand is upheld only to the extent of service tax on the technical services component, excluding the reimbursable salary amount, for the normal period of limitation – The appeal is partly allowedrnrnService tax liability on management services received from their associate company – HELD - The services were clearly received from an associate company, not from an employee, and constitute taxable management services under the RCM. There is no dispute regarding the payment being made for services actually rendered by the associate company, which brings the transaction squarely within the scope of service tax. The demand for service tax on management services is confirmed and upheld.rnrnService Tax on Cost Sharing Arrangement - Allocation of Common Expenses - Whether amounts paid under a cost sharing arrangement for allocation of common expenses constitute taxable services liable to service tax – HELD - The amount in question is liable to service tax as the payments constitute services received rather than a mere cost sharing arrangement. The amount was admittedly paid for services rendered by the associate company and therefore cannot be exempted from service tax by merely characterizing it as a cost sharing arrangement.
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