Advance Ruling Services, including services of common employees, by branch to head office in another State or vice versa liable to GST

Financial Year: 2023

Services, including services of common employees, by branch to head office in another State or vice versa liable to GST

 

Profisolutions (P.) Ltd., In re (AAR- Tamil Nadu) The applicant was registered in the state of Karnataka and has its branch office registered in the State of Tamil Nadu (Chennai).

The branch office provided support services like engineering services, design services, accounting services etc. to the head office in Karnataka through the common employees of the company. The employees were appointed and working for the company as a whole and not employed for head office or the branch specifically.

 

 The applicant approached the Authority of Advance Ruling of Tamil Nadu on the taxability of the services provided by the branch office in one state to the head office in another state through the common employees.

 

The Authority of Advance Ruling of Tamil Nadu observed that service of an employee working in a branch flow only through the branch to the head office. It is further added that as long as the employee is deployed in a branch of an entity, his services that is rendered directly to head office will be in his representative capacity as an employee of the branch.

 

Given the above, the Authority of Advance Ruling of Tamil Nadu  held that the services of employees deployed in a registered place of business to another registered premises of the same person will attract GST, as the employees are treated as 'related person' in terms of explanation to Section 15 of the CGST Act, 2017 and treated as supply by virtue of Entry 2 of Schedule I of the CGST Act, 2017.

 

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Regards

CA Rahul Gupta

+91-80535-55086