Alstom Transport India Limited Vs State of Karnataka (Karnataka High Court)
Karnataka HC granted ad-interim stay on adjudication proceedings on levying IGST on secondment of manpower
Summary: The Karnataka High Court granted an ad-interim stay on adjudication proceedings involving Integrated Goods and Services Tax (IGST) on seconded employees’ salaries in the case of Alstom Transport India Ltd. v. State of Karnataka. The issue arose after a Show Cause Notice (SCN) demanded IGST of ₹59.57 crore based on a Supreme Court ruling in the Northern Operating Systems Pvt Ltd. case, which treated secondment of manpower from overseas entities as a taxable service. Alstom, however, argued that the payments made to expatriate employees were part of their regular salary and did not qualify as manpower supply services, thus should not attract IGST. The petitioner referred to Circular No. 210/4/2024-GST issued by the Central Board of Indirect Taxes and Customs (CBIC), which clarified that where full input tax credit (ITC) is available, the value declared in the invoice by the related domestic entity can be deemed as the open market value. The court, without addressing the merits of the case, directed the petitioner to respond to the SCN while allowing the authorities to consider the recent circular during adjudication. The stay ensures that no further legal actions are taken until a proper review of the circular’s implications is completed.
