Services by Branch to Head Office Liable to GST: AAR

Case Details: Profisolutions (P) Ltd., In re - [2023] 149 taxmann.com 337 (AAR-Tamil Nadu)

Judiciary and Counsel Details

• • N. Usha & R. Gopalsamy, Member

Facts of the Case

The applicant is registered in the state of Karnataka and has its branch office registered in the State of Tamil Nadu (Chennai). The branch office provides 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 are 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 (hereafter referred to as ‘TN AAR’) 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.

AAR Held

The TN AAR observed that service of an employee working in a branch flows 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 TN AAR 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.