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Branch office services to head office through common employees constitute taxable supply under Section 25(4) and Section 7 GST Act AAR Tamil Nadu ruled that supply of services by a branch office in one state to head office in another state through common employees constitutes taxable ...
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Branch office services to head office through common employees constitute taxable supply under Section 25(4) and Section 7 GST Act
AAR Tamil Nadu ruled that supply of services by a branch office in one state to head office in another state through common employees constitutes taxable supply under GST. The authority held that services between different registrations of the same person, whether in same or different states, attract provisions of Section 25(4) and Section 7 read with Schedule I(2) and Section 15 of CGST Act, 2017. Services by employees deployed between registered premises of same person are treated as supply since employees are considered related persons under Section 15 explanation and deemed supply under Schedule I(2).
Issues: The judgment addresses the liability to pay tax on services provided by a branch office to a head office under the Goods and Services Tax Act, 2017.
Issue 1: Advance Ruling Authority's Jurisdiction and Binding Nature of Ruling The Advance Ruling Authority's order can be appealed before the Tamil Nadu State Appellate Authority for Advance Rulings within 30 days. The ruling is binding on the applicant and the concerned officer unless there are changes in law, facts, or circumstances supporting the original ruling.
Issue 2: Application and Nature of Services Provided The applicant, a company registered under the Companies Act 2013 in Karnataka with a branch office in Tamil Nadu, sought a ruling on the tax liability for services provided to the head office in Karnataka. The services, including engineering, design, and accounting services, are provided by common employees. The applicant argued that these services do not constitute a supply under the CGST Act.
Issue 3: Interpretation of Statutory Provisions The Authority considered the provisions of the CGST Act regarding supply of goods or services between related or distinct persons. It was noted that services provided by employees deployed in one registered place of business to another registered premises of the same person are treated as a supply under the Act.
Decision: The ruling states that services provided by a branch office to a head office, with separate GST registrations, will attract GST liability under the IGST Act, CGST Act, SGST Act, or UTGST Act. The ruling emphasizes that services, including those of common employees, between distinct persons with separate registrations are subject to GST.
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