TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 79
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....ess a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions made by the applicant is as under:- 2.1 Power Europe GmbH (Head Office) (HO), a Company incorporated under the Laws of Germany has been awarded contracts for supply of goods and supervisory services by M/s. BGR Boilers Private Limited (HGRB) in relation to Projects of M/s. NTPC Limited, M/s. Meja Urja Nigam Private Limited and M/s. Damodar Valley Corporation (hereinafter referred as 'DVC') being Mega power projects, located in Maharashtra, Uttar Pradesh and West Bengal respectively.. 2.2 Under the Foreign Exchange Management Act, 1999, (FEMA, 1999) a Foreign Company executing projects in India is permitted to open an office in India to undertake such project, commonly referred to as "Project Office". Accordingly, HO has constituted 3 Project Offices for undertaking onshore portion of the said Projects in India at Chennai -6....
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....t of the Project can be remitted to the Foreign Company subject to the condition that the remittance of funds to Foreign Company should not affect the completion of projects in India. Any shortfall of funds for meeting any liability of the Project Office in India would be met by the Foreign Company by way of inward remittance. Hence, the Foreign Company would be responsible for the liabilities outstanding for the Project Office. The Project Office cannot directly sign or enter into any contracts/ agreements in India for supply of goods/services from the said Project Office. The Project Office should close down its operations in India after completion of the specified project. 2.8 Applicant has discussed a 'Foreign company', it's definition and responsibilities and the obligations of a Project Office in India, under the Companies Act, 2013. 2.9 Further, it is also submitted that a Project Office has to obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) to be issued in the name of the Foreign Company. 2.10 In the subject case, HO has obtained the PAN for the Project Office India and HPE Germany's Project Office in India supplies goods and....
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.... maintains Financial Statements only for the requirements under the Companies Act, 2013. The rights and responsibilities of the Project Offices in India are not independent from that of the Head Office. The Project Office does not enter into contracts directly and it only executes the contract executed by the Head Office and is completely funded by the Head Office and any surplus of the Project Office is repatriated to Head Office. 2.15 The applicant has made various submissions supporting their contention that accounting of Salary of the Expat Employees in their Books of Accounts even though the salary is paid by the HO, is not taxable under GST. They have also cited various case laws in support of their contention. 2.16 They have further submitted that Services provided by an employee to an employer in the course of employment are outside the ambit of GST as per Schedule III of the CGST Act, 2017. 2.17 The Applicant submits that the Project Office is an office of e Foreign Company in India and not a separate entity and does not have any independent legal or contractual obligations as per provisions of FEMA/by virtue of PO being an extended arm of HO. Further, the Income Tax Ac....
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.... by the Holding or Subsidiary Company. Hence Applicant submits that when a transaction between a Holding Company and Subsidiary Company, which are treated as two separate legal entities under various Indian laws (i.e., The Companies Act, 2017, the Income Tax Act. 2017, the CGST Act, 2017) is itself exempt from the levy of GST, the same ratio should be applied even in the context of the Head Office and the Project Office, considering the fact that the above Indian legislation treats the Head Office and the Project Office as single legal entity. 2.20. Applicant, citing the definition of a 'Project Office' under FEMA, 1999, has submitted that the Project office is merely a place of business of a Foreign Company to carry out business in India and does not constitute an establishment. Head Office and Project Office are not separate establishments under the GST legislation and would accordingly be not subject to levy of GST. Applicant has also referred to a recent ruling held by the Authority for Advance ruling, Rajasthan in the case of M/s. Habufa Meubeitn B.V. [2018 (14) G.S.T.L. 596 (A.A.R. - GST)] = 2018 (7) TMI 883 - AUTHORITY FOR ADVANCE RULING - RAJASTHAN, in support. 03. CONTEN....
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....-RB dated 31.03.2016, as amended from time to time (Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016), (hereinafter referred to, as the FEMA Regulations). 5.3.2 As. Per Sr.No. 2 (f) of the FEMA Regulations, a "Project Office" means a place of business in India to represent the interests of the foreign company executing a project in India but excludes a Liaison Office. 5.3.3 Sr No. 3 of the FEMA Regulations states that "No person resident outside India shall without prior approval of the Reserve Bank open in India a branch office or a liaison office or a project office or any other place of business by whatever name called except as laid down in these Regulations". 5.3.4 The eligibility conditions for opening a Project Office, the permissible activities that can be carried out by the Project Office, the application form for opening a Project Office, etc are all mentioned in the FEMA Regulations and therefore it's seen that such offices are regulated by law. 5.4 We find that as per the above provisions a company, resident outside India, may initiate business in India by....