TaxTMI 
TaxTMI 
2021 (1) TMI 690
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....agricultural machinery spare parts. 1.2 WFSE India is established as a Liaison office in India, currently operating from its Gurugram Office located at 7002A, Palm Springs Plaza, Golf Course Road, Sec 54, Gurugram, Haryana, 122003, with the permission of RBI, vide letter no. FE.CO.FID/10.97.319/2009-10 dated 25th August 2009 to undertake following activities:- (a) Representing in India the parent company/group companies (b) Promoting export import from/to India (c) Promoting technical/financial collaborations between parent/group companies and companies in India (d) Acting as communication channel between the parent company and Indian companies 1.3 Activities carried out by LO in India are as follows:- (a) Identification of vend....
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....es/services rendered by it or otherwise in India. 2. Question(s) on which advance ruling is required 2.1. Whether the reimbursement of expenses and salary paid by Wilhelm Fricke SE, Germany to the liaison office established in India is considered as supply of services as per Section (7) of the CGST Act, 2017 or under Schedule I of CGST Act, 2017, especially when no consideration is charged/ paid. 2.2 Weather the applicant i.e. the Liaison Office is required to get registered under GST? 2.3 Whether the applicant i.e. LO is required to pay CGST/SGST/IGST, as the case may be, on reimbursement received from HO? 3. DISCUSSIONS 3.1 The applicant submitted that the activities undertaken by LO/applicant are strictly in line with the terms and....
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....at supply of services between related parties or distinct persons as per Section 25, even without consideration, constitute a supply, when made in the course or furtherance of business. Related Person and Distinct Person has been defined under CGST Act, 2017 as follows:- Related person is defined through Explanation to Section 15 of CGST, which is as follows: (a) Persons shall be deemed to be "related persons" if- (i) such persons are officers or directors of one another's businesses; (ii) such persons are legally recognised partners in business; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five percent or more of the outstanding voting stock or shares of bo....
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....ate legal entity that has been established and WFSE India i.e. LO has not taken any activity of trading, commercial or industrial nature nor would they enter into any business contracts in its own name without RBI's prior permission. LO is not receiving any fees for the services provided to the HO as the same are being provided by the employees of the same entity. The Head office, reimburses the expenses incurred by WFSE India in the nature of salary, rent, security, travelling etc. Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. The applicants are merely an executing arm of the head office and do not have resourc....
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....e expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate persons, there cannot be any flow of services between them as one cannot provide service to self and therefore, the reimbursement of expenses made by the HO cannot be treated as a consideration towards any service. 4.3 The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services. 4.4 Further the liaison office is strictly prohibited to undertake any activity of tradi....