Thales India Private Limited Vs Additional Commissioner of CGST (Delhi High Court)
The Delhi High Court has quashed a show-cause notice (SCN) issued to Thales India Private Limited by the Additional Commissioner of CGST, challenging the company’s Goods and Services Tax (GST) liability concerning seconded employees. The court’s decision, relied heavily on a clarification issued by the Central Board of Indirect Taxes and Customs (CBIC) and a recent judicial precedent.
Thales India, an entity registered under the Central Goods and Services Tax Act, 2017, is engaged in various services including administrative support and consulting. The company had an arrangement for “secondment of employees” from foreign entities, where these individuals were to work in India as employees of Thales India. The petitioner contended that expenses related to these seconded employees were solely for their employment and thus not subject to GST, particularly as there was no agreement between Thales India and the foreign entity, only between Thales India and the individual employee.
Despite this contention, Thales India reassessed its expenses for seconded employees and, under protest, paid INR 8,99,61,147/- on March 20, 2024, to avoid potential future liabilities. This payment and the company’s position were communicated to the audit team and the Assistant Commissioner.
