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of <h1>Reimbursement to Liaison Office in India not subject to GST if no services provided</h1> <h3>In Re : M/s Habufa Meubelen B.V.</h3> In Re : M/s Habufa Meubelen B.V. - TMI Issues:1. Whether the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V. to the liaison office established in India is liable to GST as a supply of service.2. Whether the applicant, the Liaison Office, is required to get registered under GST.3. If the reimbursement of expenses and salary is considered a consideration towards a service, what will be the place of supply of such serviceRs.Analysis:1. The applicant contended that no consideration is charged between the Head Office (HO) and the Liaison Office, and as per Section 9 of the CGST Act 2017, GST is not applicable if a transaction does not fall under the scope of 'supply' as defined in Section 7. They argued that for an activity to be liable to GST, it must meet the criteria of Section 7, which includes consideration. Since no separate consideration is charged, they claimed it does not qualify as a service under GST law.2. The applicant further argued that the Liaison Office and the HO cannot be considered separate entities, as the Liaison Office is merely an executing arm of the HO and does not have the resources to carry out business activities independently. They emphasized that all expenses incurred by the Liaison Office are reimbursed by the HO, and therefore, there is no flow of services between them as one cannot provide service to oneself.3. Regarding the requirement of GST registration, the applicant cited Section 22 of the CGST Act, stating that every supplier must be registered if their turnover exceeds a specified limit. Since the Liaison Office is prohibited from engaging in trading or commercial activities and the reimbursements claimed do not constitute a supply of service, they argued that registration is not mandatory.Decision:The Authority for Advance Rulings ruled that the reimbursement of expenses and salary by the HO to the Liaison Office in India is not liable to GST if the Liaison Office does not provide any consultancy or other services directly or indirectly, and does not have significant commitment powers on behalf of the HO. As there is no consideration charged for any services, and the reimbursement claimed falls outside the scope of supply of service, the Liaison Office is not required to register under GST regulations.
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