The Punjab and Haryana High Court has granted interim relief to Bayerische Motoren Werke AG (BMW) India from the Goods and Services Tax (GST) demand raised against reimbursement of salary expenses to expats.
The petitioner counsel, Rajat Bose, Shohini Bhattacharya, Rishab Singla and Nitish Bansal, contended that the petitioner’s parent company is BMW AG based in Munich, Germany and an agreement dated 01.04.2006 was entered into for employing personnel having requisite skills and expertise. Part of their remuneration (salary, bonus benefits, reimbursement etc.) were to be paid outside India to the extent permissible under the laws and regulations of India.
The said amounts were to go through the parent company for administrative convenience and the said company was to act as a paying office. The balance amount was to be paid by way of employment agreements to be entered into with each identified Expatriate and the petitioner was to bear all personnel costs and expenses, the counsel submitted.
It was pointed out that on account of the judgment of the Apex Court in C.C., C.E. & S.T., Bangalore [Adjudication] V. Northern Operating Systems Pvt. Ltd. , the issue was again raised and the investigation had started on 22.09.2022
The petitioner submitted that thereafter the company had voluntarily deposited a sum of Rs.1,32,88,959/- towards IGST on the amount reimbursed to overseas entities for the Haryana GST Registration Number.
A similar payment of Rs.11,30,474/- was made for the Tamil Nadu GST Registration Number, totalling Rs. 1,44,19,433/- plus interest of Rs. 42,17,774/-. It is submitted that the notice under Section 73(5) of the Central Goods Service Tax Act, 2017 for payment of IGST along with applicable interest payable by them was issued on 21.09.2023 in which the factum of the deposits was also noticed and outstanding demand of Rs. 25,28,02,998/- was assessed.
It was also submitted that the matter would go to the root of the jurisdiction as such and the respondents are still proceeding ahead.
Sourabh Goel, Sr. Standing Counsel accepted notice on behalf of the respondents-revenue and prayed for time.
The Division Bench of Punjab and Haryana High Court comprising Justices G S Sandhawalia and Lapita Banerji observed that, “since the petitioners have already represented and have taken time as such before the Revenue on 20.11.2023 that they are in the process of collating the documents to prepare a comprehensive response, the necessary response be filed by 15.01.2024.”
It was also stated that, “The respondents shall then take a decision on the same. In case any adverse order is passed against the petitioners during the pendency of the writ petition, the respondents shall not take any coercive steps to recover the amount.”
The matter was adjourned to be heard next on 13 February 2024.
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