Madras High Court stays Rs 80 Crore GST demand on Hyundai Motors for Seconded Employee Salaries.
The Madras High Court has temporarily halted a Goods and Services Tax (GST) claim approximating Rs 80 crore from Hyundai Motors regarding salaries to seconded personnel. Hyundai contested a tax notification dated December 23, 2023, from the GST department, which sought to tax the full salary disbursed to these temporarily reassigned employees.
Such “secondments” are a standard practice among multinational corporations, wherein employees are briefly transitioned to different positions, often within the same corporate family, internationally or domestically, for a fixed time. Justice Senthilkumar Ramamoorthy, presiding over the case, noted, “Given that a preliminary argument has been established and interim relief has been granted by several high courts, which are also deliberating on whether this type of arrangement falls under ‘taxable supply,’ a temporary suspension of the ensuing procedures from the contested order is warranted until further hearing.”
The court has scheduled a follow-up hearing for April 8. Meanwhile, GST officials argue that, in the context of a secondment, the employer should be treated as the ‘service recipient,’ with the services rendered by the foreign employees being classified as a “manpower supply” in accordance with GST legislation.
Source from: https://www.a2ztaxcorp.com/blogs/6606a708ffbac666aaccc481/details