INTRODUCTION
In case of Multi-National Enterprise (MNE) Groups, it is a usual practice for a foreign parent or group entity to depute or second it’s employees to the Indian subsidiary or group company for various reasons. Such reasons,
inter alia, include enabling the Indian subsidiary to provide quality services to the group entities or to enable the subsidiary to carry on its own business in a more efficient and effective manner by using the expertise of the deputationist or seconded employee. In such scenarios, the department is often found taking a stand that the salaries paid by the Indian subsidiary or group company to such deputationists or seconded employees or the reimbursement of such salary costs by it to the foreign parent or group company amounts to ‘Fees for technical Services’ payable by the Indian entity to the foreign entity. The department is also found taking a stand that the services rendered by such an employee constitutes a ‘Service PE’ in India. To counter this stand of the department, assessees adopt various defenses, which among other things, include the most common stand that the deputationist or seconded employee becomes the employee of the Indian entity during such period of deputation or secondment. In this article, the authors seek to discuss the tests laid down by Courts and Tribunals to determine the true employer in such cases.
GENERAL TESTS FOR DETERMINING E
