Repair Services Via Field Engineers in State Don’t Create ‘Place of Business’ When Contracts & Invoicing from HO: AAAR [Read Order]

In a recent ruling, the Odisha State Appellate Authority for Advance Ruling (AAAR) held that repair and maintenance services provided through Field Service Engineers (FSEs) in Odisha do not create a “place of business” in the State when the AMC/CMC contracts, invoicing, and receipt of consideration are handled by the Head Office (HO) in Maharashtra.

The case arose after M/s Thermo Fisher Scientific India Private Limited filed an appeal under Section 100 of the CGST Act and OGST Act against an order passed by the Odisha Authority for Advance Ruling (AAR). The AAR had held that the repair and maintenance services provided through FSEs in Odisha constituted a “place of business” in Odisha under Section 2(85) of the CGST Act.

Before the AAAR, the appellant's counsel argued that the AMC/CMC agreements with customers in Odisha were entered into by its HO in Maharashtra and not by any unit in Odisha. They also argued that the invoices for AMC/CMC services were raised by the HO and the consideration was received by the HO.

The appellant’s counsel further explained that the FSEs deployed in Odisha were employees of the company working under the instructions and control of the HO and they did not enter into any contracts with customers in Odisha.

After examining the statutory definition of “place of business” under Section 2(85) and the factual record, the two-member bench comprising Ms. Yamini Sarangi (Member, State Tax) and Shri P.R. Lakra (Member, Central Tax) observed that the supply of services was being made from the HO in Maharashtra. The tribunal observed that all agreements were executed by the HO, all invoices were issued from the HO, and the payments were also received by the HO.

The tribunal further observed that there was no separate administrative set-up in Odisha for these supplies and that the presence of FSEs in Odisha was only for providing post-sale service to customers. It pointed out that the FSEs did not act as agents and did not carry out independent business activities in Odisha on behalf of the company.

In view of these findings, the Odisha AAAR held that repair and maintenance services provided through FSEs in Odisha did not constitute a “place of business” in Odisha under Section 2(85) of the CGST Act.

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