CCE Banglore Vs Northern Operating Systems Pvt ltd (Supreme Court)
Date-19th May 2022

Sub-Services of employees of Overseas group company received by the Indian counter part on secondment held to be manpower services liable to be taxed under the service tax regime, though extended period of limitation held not liable to be involved.

The Supreme Court three judges considered in detail the meaning of manpower recruitment or supply agency service, the agreement between employer and employee and secondment agreement and whether the facts of a given case reveal, who is the employer, and whether the relationship between an employee and another, is one of master servant, or whether there is an underlying contract for service, by which the real employer, lends the services of his employee to another. Thereafter the court held that in the case of Mersey Docks and Harbour Board v. Coggins & Griffith (Liverpool) Ltd. [(1952) SCR 696, 702] it was held that the proper test is whether or not the hirer had authority to control the manner of execution of the act in question. The court also refused to laid down one single determinative test, but that what is applicable is “a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight. On these facts the liability for normal period was upheld.

An important judgement which will have effect on lot of corporates and other assessees.

Ramesh Patodia
19-05-2022