Madras HC Stayed Order Treating Entire Salary Paid to Seconded Employees as Taxable Supply

Case Details: Hyundai Motor India.Ltd. v. Additional Commissioner - [2024] 161 taxmann.com 129 (Madras)

Judiciary and Counsel Details

• Senthilkumar Ramamoorthy, J.

Facts of the Case

The petitioner was engaged in business of manufacture and supply of automobiles. It entered into agreements with its parent company and seconded employees to the petitioner for a fixed term. The department issued a show cause notice to the petitioner and alleged that it was liable to pay GST on the salary of seconded employees.

It submitted that the entire salary paid to seconded employees was subject to income tax and outside the scope of supply under applicable GST enactments. However, the department passed an order and treated entire salary paid to seconded employees as taxable supply. It filed writ petition against the said order.

High Court Held

The Honorable High Court noted that the issue was whether the salary of seconded employees would be treated as consideration for supply of service. The Court noted that the several High Courts granted interim relief and are also examining whether such an arrangement would qualify as a taxable supply or not. Therefore, the Madras High Court held that since prima facie case was made out, an interim stay of further proceedings pursuant to impugned order to be granted until matter was heard next.