The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 18% Integrated Goods and Service Tax (IGST) leviable on reimbursement of ‘Wellsone Commercial Card’ expenses from the subsidiary company to its ultimate Holding company.
The applicant, M/s ICU Medical LLP is engaged in the business of software development for the infusion system manufactured by its ultimate Holding company ICU Medical Inc., having its place of business in the USA.
The applicant has stated that the ICU Inc. downloads and shares the monthly statement with respective entities including the applicant, for them to book the said expenses in their books.
These expenses are booked as an intercompany transaction, debiting the corresponding expenses, and crediting the intercompany payable ICU Inc. settles the monthly credit card liability with Wells Fargo Bank for all locations globally.
An invoice is raised by ICU Inc. on the applicant for the credit card liability settled by it with the bank. The applicant settles the credit card liability paid by ICU Inc., to the bank in the form of reimbursement of expenses at actual. There is no agreement per se between ICU Inc., and the applicant towards such arrangement of settlement of credit card liability paid by ICU Inc., by way of reimbursement.
The applicant sought the advance ruling on the issue of whether GST is leviable on the reimbursement of expenses from the subsidiary company to its ultimate Holding company located in a foreign territory outside India.
The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan ruled that the applicant is liable to pay IGST on the ‘Wellsone Commercial Card’ expenses paid by the applicant to its Ultimate Holding company, ICU Medicals Inc. having its place of business in the USA under Reverse Charge basis.
The AAR further held that the applicant is liable to pay IGST under Reverse Charge, the applicable rate of IGST is 18%.
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