Summary
- The Karnataka High Court (“HC”) in its recent judgement¹ in the case of Alstom Transport India Ltd (“Alstom India”) quashed a ₹57.94 crore IGST demand raised on Alstom India in relation to the secondment of expatriate employees from overseas group entities.
- The HC held that the arrangement constituted an employer-employee relationship and was therefore excluded from the ambit of “supply” under GST.
Facts of the case
- Alstom India is involved in rail/metro infrastructure projects and engaged expatriate employees from its foreign group companies under secondment arrangements.
- The employment agreements with the expatriate employees were executed with the Indian entity. The expatriates were on Alstom India’s payroll and the salary was paid directly to the expatriates in India and TDS on the salary payment was deducted by Alstom India.
- The social security and related benefits, if any, paid by the foreign entity were reimbursed by Alstom India to the foreign entity.