SGST Advance Ruling Authority

GST – Maharashtra AAR - Supply of service Registered/Corporate office, Cross Charge - Taxability of services provided by Corporate office to its Group Companies - Whether the managerial and leadership services provided by the Registered/Corporate Office to its Group Companies can be considered as “supply of service”, in terms of Section 7 of CGST Act, 2017 and liable to GST - Applicant is of the opinion that the supply of services to group companies and branches is services by an employee to the employer in course of or in relation to his employment shall be neither treated as a supply of goods nor a supply of services – HELD - Applicant, a Registered / Corporate Office, supplies managerial and leadership services to its branch offices and group companies, which are distinct and related persons and receives fixed monthly charges from each of the distinct and related persons - As per Schedule I to the CGST Act, Entry No. 2, “Supply of goods or services or both between related persons or between distinct persons, as provided in Section 25 of the CGST Act, when made in the course or furtherance of business will be activities to be treated as supply even if made without consideration - the site offices/group companies cannot be treated as persons who are employed by the applicant. The site offices are independent offices separately registered under the GST Laws, similarly the group companies are also separately registered under the GST Laws and since both the site offices as well as the group companies cannot be treated as employees, the applicant cannot get the benefit of Entry No. 1 to Schedule III. The supply of services by the applicant will be covered under Entry No. 2 to Schedule I and is therefore taxable under GST - the applicant is required to pay GST on the lumpsum amount charged by them to their Group Companies - Whether the lump sum amount charged on its Group Companies would be liable to GST under Section 8 of CGST Act, 2017 – HELD - the applicant will have to pay GST on the lumpsum amount charged by them to their Group Companies - Valuation - Whether the Applicant can continue to charge certain lump sum amount in terms of second Proviso to Rule 28 of CGST Rules, 2017 – HELD - the applicant may resort to valuation under Rule 28 of the CGST Rules, in respect of transactions with routed/distinct persons who are eligible for full input tax credit as per the second proviso to rule 28 of the CGST Rules, 2017

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