GST leviable on Reimbursement Amount, being Advance Payment made by Holding Company towards Cost incurred for provision of Software Services: AAAR

GST - Reimbursement Amount - Software Services - AAAR - Taxscan - opengraph

The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) ruled that GST leviable on reimbursement amount, being advance payment made by holding company towards the cost incurred for the provision of Software Services.

The appellant 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 appellant 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 AAR 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%.

The coram of M.A. Siddiqui and G.V. Krishna Rao held that the Ruling pronounced by the Advance Ruling Authority is modified to the extent that GST is leviable on the reimbursement amount, being advance payment made by the holding company towards the cost incurred for the provision of Software Services supplied by the appellant, as per the Time of Supply provided under Section 13 of the CGST/TNGST Act 2017 and the applicable rate is that applicable to the supply of Software Services made by them.

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