Case Law Details
Turner Project Management India Pvt. Ltd Vs Commissioner of Central Tax (CESTAT Mumbai)
Introduction: In the case of Turner Project Management India Pvt. Ltd vs. Commissioner of Central Tax (CESTAT Mumbai), a significant question arises: whether service tax is applicable to contributions made towards the social security of employees, which are considered part of their salary. This article provides an in-depth analysis of the case and its implications.
1. Background: Turner Project Management India Pvt. Ltd, the appellant, incurred service tax under the reverse charge mechanism for contributions made towards the social security of employees from their overseas holding company who worked in India. The appellant paid Rs. 19,67,840/- in service tax between April 2016 and April 2017. The amount was utilized as cenvat credit since it was paid under the reverse charge mechanism.
2. Realization of Overpayment: Subsequently, the Revenue authorities questioned the applicability of service tax on contributions made by the employer as part of the employee’s salary. The argument was that the definition of service, as per Section 65B(44) of the Finance Act, 1994, excludes payments made by employers to employees. Additionally, Rule 2(l) of the Cenvat Credit Rules, 2004, indicated that this amount should not be considered as duty or service tax paid, making it ineligible for cenvat credit.
3. Recovery Proceedings: In response to these concerns, the Revenue initiated proceedings to recover the amount that the appellant had availed as cenvat credit, as it was considered irregular and ineligible. The original authority confirmed the demand and imposed penalties. The appellant then appealed to the learned Commissioner (Appeals), but the Commissioner (Appeals) upheld the original order, leading to the appellant’s appeal to CESTAT Mumbai.
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