Delhi High Court directs revenue for refund of tax liability deposited on Secondment of employees

The Hon’ble High Court of Delhi, in yet another landmark judgement, ruled that the GST refund cannot be denied by disregarding the binding high court order where no appeal or stay is pending.

The above judgement in the matter of Thales India Private limited vs Assistant commissioner CGST, Delhi, dated May 27^th 2025, revolve around the Metal one corporation ruling by the same High court, which favored the assessee in the matter of GST Liability on Secondment of employees.

The dispute initiated with Thales India Private limited filing the writ petition with the High court of Delhi challenging the SCN issued by the assistant commissioner demanding GST on salary cost reimbursed by Thales India to its foreign group entity for Secondment of employees. In respect of which, the HC ruled in favor of the assessee on the grounds of circular no 210/4/2024-GST of the CBIC which clearly states that:

“where no invoice is raised by the related domestic entity in respect of services rendered by its foreign affiliate, the value of such services would be "deemed" to have been declared as 'Nil' and that 'Nil' value liable to be treated as the market value for the purposes of the Second Proviso to Rule 28”

Considering the above and relying on the verdict in case of Metal one corporation it is conceded that no invoices were generated. Therefore, the value of the service rendered would have to be treated as 'Nil' and it lead to no plausible tax liability under this provision.

Basis this grant of relief the petitioner then applied for refund of tax of INR 8.99 Cr already deposited without admitting any liability, but to avoid any further dispute, which was duly rejected by the respondent department stating that the competent authority has not yet accepted the ruling in the case of Metal One Corporation also the respondent is of the view that there is no actual employer- employee relationship among the seconded employee.

Aggrieved with this the Thales India private limited filed for writ and the Delhi high court held that there since the petitioner’s own case and in Metal One Corporation (supra), had not been challenged by the Department of Revenue, the legal position attained finality. Accordingly, it directed that the refund claim under Section 54 of the CGST and Delhi GST Act be processed and credited to the petitioner within two months.