Managerial and leadership services provided by Corporate Office to its group companies is considered as supply of services: AAR

Case Details: Authority for Advance Rulings, Maharashtra B. G. Shirke Construction Technology (P.) Ltd., In re - [2021] 132 taxmann.com 124 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

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

Facts of the Case

The applicant was involved in business of civil construction, structural engineering, fabrication and erection of transmission tower material and aviation chartering etc. It had registered office in Pune and also had GST registered group companies. It filed application for advance ruling to determine whether managerial and leadership services provided by the registered/corporate office of applicant to its group companies would be considered as supply of service or not.

AAR Held

The Authority for Advance Ruling observed that as per Section 7(1)(c) of CGST Act, 2017, the activities specified in Schedule I to the CGST Act, shall be treated as supply of goods or services, even if made without consideration. As per Schedule I, Entry No. 2, supply of goods or services or both between related persons or between distinct persons when made in the course or furtherance of business shall be treated as supply even if made without consideration. In the present case, group companies were also separately registered under the GST Laws and therefore, would be covered under Entry No. 2 to Schedule I being related persons. Thus, managerial and leadership services provided by Corporate Office to its group companies would be considered as supply of service and taxable under GST.

Case Review

• • Agencia Commercial International Ltd. v. Custodian of Branches Banco Nacional Ultramarino AIR 1982 SC 1268 (para 3.3.6)
  • Transportation Corporation of India v. Employees’ State Insurance Corporation [1999] 4 SCR Supp. 393 (para 5.3.7)
  • Milind Kulkarni v. CCE [Order Nos. A/86066-86069/2015 – Mum.] (para 5.3.8)
  • Fransco Indian Pharmaceutical (P.) Ltd. v. CST [2016] 69 taxmann.com 198/55 GST 797 (Mum. – CESTAT) (para 5.3.9) distinguished.

List of Cases Referred to

• • Agencia Commercial International Ltd. v. Custodian of Branches Banco Nacional Ultramarino AIR 1982 SC 1268 (para 2.8)
  • Transport Corporation of India v. Employee’s’ State Insurance Corporation [1999] 4 SCR Supp. 393 (para 2.8)
  • Milind Kulkarni v. CCE [Order Nos. A/86066-86069/2015 – Mum.] (para 2.8)
  • Fransco Indian Pharmaceutical (P.) Ltd. v. CST [2016] 69 taxmann.com 198/55 GST 797 (Mum. – CESTAT) (para 2.8)
  • Specsmakers Opticians (P.) Ltd., In re [2019] 108 taxmann.com 80/76 GST 211 (AAR. – Tamilnadu) (para 2.14.1)
  • GKB Lens (P.) Ltd., In re [2018] 93 taxmann.com 477/68 GST 314 (AAR. – West Bengal) (para 2.14.1)
  • Kansai Nerolac Paints Ltd., In re [2018] 93 taxmann.com 58/68 GST 1 (AAR. – Maharashtra) (para 2.14.1).