No GST Liabilities on Salary paid to Seconded Employees: Delhi HC absolves Sony India and other Foreign Entities in light of CBIC Circular

The Delhi High Court has ruled that salaries paid to seconded employees are not subject to GST, absolving Sony India and other foreign entities from GST liabilities in light of a CBIC circular. The court’s decision was based on the interpretation that seconded employees, who are temporarily transferred to another entity, do not constitute a supply of service under GST law. The ruling emphasized that the employer-employee relationship remains intact during the secondment period, and thus, salaries paid are not considered a taxable supply. This decision aligns with the CBIC circular, which clarified that salaries paid to employees are not subject to GST. The ruling provides clarity and relief to companies engaging in secondment arrangements, ensuring that they are not burdened with additional GST liabilities. This judgment is significant for multinational companies operating in India, as it reinforces the principle that employee salaries are outside the purview of GST.