Airbus Group India Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Bangalore)
In Airbus Group India Pvt. Ltd. Vs Commissioner of Central Excise, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore considered multiple appeals arising from orders confirming service tax demands on employee secondment arrangements between the appellant and its holding company, Airbus SAS France. Under a service agreement, the holding company provided employees with expertise to the appellant, and the appellant paid salaries and remuneration in foreign exchange to the holding company.
The Department treated these arrangements as “Manpower Recruitment or Supply Agency Service” and issued multiple show cause notices covering the period from April 2008 to June 2017, demanding service tax along with interest and penalties. The adjudicating authorities confirmed the demands, including invocation of the extended period of limitation and imposition of penalties.
Before the Tribunal, the appellant did not dispute the taxability of such services in light of the judgment of the Supreme Court in Northern Operating Systems Pvt. Ltd., which held that secondment of employees by an overseas entity constitutes taxable manpower supply service. However, the appellant contested the invocation of the extended limitation period and imposition of penalties.
The Tribunal examined the issue of limitation in light of the Supreme Court’s ruling. It noted that the apex court had held that where the assessee’s understanding of tax liability was based on prevailing interpretations and was not mala fide, the extended period of limitation cannot be invoked. The Supreme Court had also observed that absence of wilful suppression or deliberate misstatement would negate the applicability of extended limitation.
