Practical Accounts And Taxation
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The assessee, BMW India, was a 100% subsidiary of BMW AG (Parent company), manufacturer of BMW brand of motor vehicles. While audit, it was noticed that the assessee had not discharged service tax liability on salaries and perquisites of the employees under Manpower Recruitment or Supply Agency Service. Hence, the department elevated the demand of service tax on the assessee under reverse charge mechanism due to which the assessee filed an appeal in the Tribunal against the same. The Tribunal held that the employees had been deputed by parent company under the direct control and supervision of BMW India and the employees were paying income tax in India. Hence, the service tax demand was not justifiable on the salary as BMW AG was not a manpower supplier.
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