GST under reverse charge by HO

[Kaustubh Karandikar]

XYZ registered with GST for principal place of business at Aurangabad and Head office at Mumbai as additional place of business. Head office also registered as “ISD”. Head Office receiving security services from a proprietor and therefore liable to pay GST on it under reverse charge. Can the principal place of business at Aurangabad pay GST on it under reverse charge or Head office is required to take a separate registration? If Aurangabad pay the GST under reverse charge how can head office distribute the credit to all the locations of XYZ?

[KASTURI SETHI]

Head office is required to obtain registration for payment of tax under RCM. Head Office cannot play the role of ISD. See Board's Flyer No.10 dated 1.1.18

[SHIVKUMAR SHARMA]

Shri Kasturi Ji

I have seen the Para 10 of Board flayer No 10 but I have not seen anywhere in the Para that Head Office cannot play the role of ISD.You are requested to please provide the same duly highlighted & oblige.

[KASTURI SETHI]

My reply was relating to this specific query. Head Office cannot play the role of ISD without registration as ISD.

[KASTURI SETHI]

Dear Sh.Sharma Ji,

What I want to say that answer to the querist's query is inherent in Board's Flyer No.10 dated 1.1.18

[Alkesh Jani]

Sir,

In this regards, my point of view is that, in terms of Section 24(iii) person who required to pay tax under reverse charge are required to obtain registration. Assuming that the Security services are received by the HQ and place of supply is also of HQ., than HQ is required to obtain registration and is liable to pay tax under RCM. The ITC cannot be taken by ISD as this input service is not common for all other units, as only HQ has availed this services. Moreover, Section 20(c),(d) and (e) is applicable in the case. The flyer issued to clarify the matter and relevant portion is reproduced below:-

“However, if a particular input service pertains exclusively to only one unit and the bill is raised in the name of ISD, the ISD can distribute the credit only to that unit and not to other units. If the input services are common for all units, then it will be distributed according to the ratio of turnover of all the units.” Hope this may help the querist for taking proper decision.

Thanks,

With regards,

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Your comprehensive reply is appreciable.It is 100 % correct. I hurriedly clicked the 'submit' and went somewhere and when I came back after two hours, a cross query was posted by Sh.Sharma Ji. Really I am very happy with his cross query. While coming back, on the way I was thinking about my incomplete reply. Anyhow you have solved the problem by replying exactly.(without any 'if' and 'but').

[Alkesh Jani]

Sh. Kasturiji sir,

Thanks for your appreciation. Infact, you deserve lot of appreciation, as you and our other experts are constantly giving their best to the query raised here, which are time and money saving for many, and only few are Turning out with a words of thanks.

With due regards,

Alkesh Jani

[KASTURI SETHI]

Dear Sh.Alkesh Jani Ji,

You are absolutely right. Why majority of querists are a thankless drone ? it hurts me. The issue is worth researching !!

AI Summary

Reverse charge mechanism: Head office must register and pay GST under RCM; ISD credit limited to consuming unit. The establishment receiving the service and liable under the reverse charge must obtain registration and pay the tax; a head office that receives the service and is the place of supply must register and cannot have the principal place of business discharge that reverse charge. Separate registration as an Input Service Distributor is required to distribute credits; only services common to multiple units may be distributed, whereas services exclusively consumed by one unit cannot be allocated to others.