GST registration not required for Liaison Office acting as a communication channel and not undertaking any business: AAR

Case Details: Authority for Advance Rulings, Maharashtra World Economic Forum, India Liaison Office, In re - [2021] 132 taxmann.com 192 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

• • Rajiv Magoo and T.R. Ramnani, Member

Facts of the Case

The applicant was a Liaison Office (LO) in India of an organization based in Switzerland. It would undertake liaison activities by acting as a communication channel between Head Office (HO) and parties in India as per RBI approval. It sought advance ruling on whether activities carried by its HO located outside India and rendered to applicant would amount to supply and whether registration would be required under GST for the applicant.

AAR Held

The Authority for Advance Ruling observed that as per section 7(1) (b) of CGST Act, 2017, import of services for a consideration whether or not in the course or furtherance of business is deemed to be a supply. Further as per Schedule I, import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business shall be treated as supply even without consideration.

In the present case, the applicant would be undertaking only liaising activities and act as a communication link between the HO and the companies in India. The HO outside India would assist in support of human resources, recruit employees in India in order to launch the LO operations in India. The applicant (LO) would not be permitted to conduct any business in India as per the RBI guidelines. For the activities undertaken by the Head Office located abroad, no consideration would be paid by the applicant to the Head Office. Since, the applicant would not be undertaking any ‘business’, therefore the activities/services received by the applicant from its HO cannot be said to be in the course or furtherance of its business and hence cannot be considered as a supply. Thus, it was held that there would not be any requirement of GST registration.