Service Tax on Secondment of Employees: CESTAT Limits Demand to Normal Period Citing Absence of Wilful Suppression

CESTAT limited a service tax demand on employee secondment arrangements to the normal one-year period, finding no evidence of wilful suppression to invoke the extended five-year limitation. The tribunal held that interpretation differences on taxability of cross-border staffing don't constitute fraud or misrepresentation. The case involved ₹8.7 crore demand on a multinational for seconded expatriate employees over six years. CESTAT allowed only ₹1.4 crore for the standard limitation period, quashing the balance. This clarifies that complex legal interpretations shouldn't automatically trigger extended limitation in service tax matters. The ruling benefits companies with global mobility programs facing retrospective demands on long-standing practices. Tax authorities must now demonstrate concrete evidence of deception, not just legal disagreements, to justify longer investigation periods.