Expat Secondment Not Taxable Under GST

Facts of the case: 

• The petitioner, Alstom Transport India Limited (“Alstom India”), operates in infrastructure projects (railways/metro), including design, manufacturing, installation and services. 

• Between July 2017 and March 2023, employees from the company’s overseas group entities were “seconded” to work in India.
• These expatriates were formally employed by Alstom India during their secondment; they received salary in India (on which TDS under Indian Income Tax laws was deducted), were governed by Indian employment agreements, and were under the exclusive administrative and functional control of Alstom India. 

• The foreign affiliate continued to provide social security / statutory benefits in the home country. Alstom India reimbursed those costs to the foreign affiliate — without any markup or separate “service fee.” 

• In September 2023, the enforcement wing of the State issued a Show cause notice to Alstom India, demanding IGST under reverse-charge mechanism alleging that the secondment arrangement constituted “import of manpower supply services.”  

Arguments of the Appellant (Assessee): 

• Alstom India contended that the arrangement was a genuine employer–employee relationship: the seconded expatriates were placed on its Indian payroll, worked under its exclusive control and supervision, had Indian employment contracts, and were integrated into its organizational structure not functioning as “outsourced manpower.” 

• No invoice was issued by the foreign affiliate for “manpower services.”
• The costs reimbursed related only to social security/benefits with no markup or service charge. 

• Alstom India invoked Circular 210/4/2024-GST dated 26 June 2024, which provides that in related-party import of services, where no invoice is raised and full ITC is claimed, the value of supply may be deemed “Nil.” 

• Therefore, even if the secondment were treated as “supply of services,” the value for GST purposes would be “Nil,” resulting in no IGST liability. 

Arguments of the Revenue: 

• The Revenue maintained that the secondment arrangement qualified as an import of manpower supply services from the foreign affiliate. 
• Accordingly, Alstom India, as recipient, was liable to pay IGST under the reverse-charge mechanism. 

• The payments made to the foreign affiliate, including reimbursements for social security benefits, were considered “consideration” for service; hence should attract GST. 

Decision of the court: 

The High Court of Karnataka, in its order dated 15 July 2025 in Writ Petition No. 1779 of 2025, held that the secondment of expatriate employees to Alstom India does not constitute a taxable supply of manpower services under GST. Accordingly, the IGST demand was quashed. 

Reasons for such decision: 

• The Court accepted that there was a genuine employer–employee relationship: expatriates were on Alstom India’s payroll, performed under its control and supervision, and were governed by Indian employment contracts — not functioning as outsourced manpower. 

• The Court noted absence of any invoice raised by the foreign affiliate for “services,” and the fact that reimbursements bore no markup. Thus there was no “consideration” as such under GST for manpower supply. 

• The Court applied Circular 210/4/2024-GST: since full ITC was claimed and no invoice was issued, value of the supply must be treated as “Nil” under second proviso to Rule 28(1) of the CGST Rules, 2017. 

Cases relied upon: 

• Circular 210/4/2024-GST dated 26 June 2024 clarifying valuation in related-party service import when no invoice is issued and full ITC is claimed.   

• Pre-GST precedents under service tax regime: Metal One Corporation India Pvt. Ltd. v. Union of India & Ors. as recognized by the Karnataka High Court to support “employer–employee” based exclusion. 

Applicability of judgment: 

• The judgment provides important relief for multinational companies (MNCs) operating in India via subsidiaries especially where expatriate secondments are structured with genuine employer–employee relationships. 

• It underscores that substance-over-form analysis matters: a mere fact of secondment from a foreign group entity does not automatically trigger GST; control, payroll, contract terms, and absence of service-fee/invoice are key. 

• Circular 210/4/2024-GST and the second proviso to Rule 28(1) become important tools: in related-party service imports with full ITC and no invoice, value can be deemed “Nil.” 

To download the full judgement of the same – M/S. Alstom Transport India Limited V. Commissioner of Commercial Taxes and Additional Commissioner of Commercial Taxes (Enforcement), South Zone and Deputy Commissioner of Commercial Taxes (Enforcement)-08, South Zone and Assistant Commissioner of Commercial Taxes Enforcement-20, South Zone

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