Case Of: M/s Alstom Transport India Ltd
Issued By: Karnataka High Court
Order No: WP No 1779 of 2025
Date: 15th July 2025
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Employees of overseas group companies were seconded to work in India between July 2017 and March 2023; they were placed on Alstom India’s
payroll and paid after TDS deduction under the Income Tax Act.
The department issued a Show Cause Notice demanding IGST, alleging that the arrangement constituted an import of manpower supply services under reverse charge.
The taxpayer relied on CBIC Circular No. 210/4/2024-GST dated 26.06.2024, which deems the open market value as ‘Nil’ in related party transactions with full ITC, where no invoice is raised.
Alstom contended that as no invoices were issued and salaries were paid directly, the secondment does not qualify as a taxable supply of services.
The Karnataka High Court held that the CBIC Circular is binding and the value of supply must be deemed ‘Nil’ in absence of an invoice and availability of full ITC.
The Court observed that seconded employees, being on the Indian entity’s payroll, had an employer-employee relationship falling under Schedule III of the CGST Act.
Citing the Delhi HC ruling in Metal One Corporation India Pvt. Ltd., the Court affirmed that the legal fiction of ‘Nil’ value overrides invocation of Rule 28.
The IGST demand was set aside, holding that the secondment arrangement did not constitute a taxable import of manpower services.