The Tamil Nadu Authority for Advance Ruling (TNAAR) determined that services, including services of common employees provided by a branch office to the head office and vice versa shall be subject to GST obligation under the relevant acts.
The relevant act includes Central Goods and Services Act, 2017 (CGST Act), State Goods and Services Act (SGST), Integrated Goods and Services Act (IGST) and Union Territory Goods and Services Act (UTGST).
The applicant, Profisolutions Private Limited, provided engineering services for the industrial and manufacturing projects. The branch office of the applicant is providing support services like engineering services, design services, accounting services, etc to the Head Office at Bangalore and also registered in the State of Karnataka under Goods and Services Tax Act.
The applicant stated that the employees are appointed and working for the company as whole and not employed for head office or branch specifically, which is a distinct person under GST.
In an appearance before the authority for the personal hearing, the applicant’s Authorised Representative (AR), Ganesh Bhat, reiterated the arguments.
The AR stated that support services like engineering services, design, accounts services, etc are provided by the common employees of the applicant company in Tamil Nadu to the Head Office of the applicant company in Karnataka. Further stated that no invoice is issued and no GST is paid for provision of the said services.
The panel of N. Usha and R. Gopalasamy stated that the statutory provisions of the Central Goods and Services Act (CGST Act), 2017, any supply of service between two registrations of the same person in the same State or in different States attract the provisions of Section 25 (4) and Section 7 read with Schedule I (2) and Section 15.
Section 25(4) of CGST Act, states that ‘a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.
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