Activities of a liaison office do not amount to supply of services under GST : AAR

Activities of a liaison office do not amount to supply of services under GST : The liaison activities being undertaken by the applicant when

CA Deepak Gupta

Oct 20, 2018

Last update on Oct 20, 2018

Activities of a liaison office do not amount to supply of services under GST: The liaison activities being undertaken by the applicant when strictly in line with condition specified by RBI permission letter do not amount to supply under CGST and SGST Act. In view of above, the Applicant is not liable to pay CGST, SGST or IGST, as applicable. Also the Applicant is not required to get itself Registered under GST for the liaison activities. Activities of a liaison office do not amount to supply of services under GST Click here to download the ruling Below is the Extract of Advance Ruling From the submissions made by the applicant as discussed in above paras, it is seen that the applicant/liaison office is working as per the terms and conditions stipulated by RBI and the reimbursement of expenses & salary of employees is paid by M/s Takko Holding GmbH to the liaison office. No consideration for any activity is being charged by the liaison office and the liaison office does not have any business activities of its own as specified by RBI conditions. Further, Schedule I of CGST Act specifies that supply of services between related parties or distinct persons as per Section 25, even without consideration, constitute a supply. Takko is acting as an extension of the German Office in its procurement activities from suppliers in India as has been spelt out in the RBI permission letter. Hence, they are neither related nor distinct persons, but are in fact working as employees of the foreign office. Accordingly, none of the liaison activities of Takko is covered under the definition of supply. Hence, Takko would not be a supplier under CGST/ SGST Act and hence is not required to obtain registration under Section 22 of CGST /SGST Act or pay CGST, SGST or IGST as applicable. 5. In view of the foregoing, we rule as under:

RULING

The liaison activities being undertaken by the applicant when strictly in line with condition specified by RBI permission letter do not amount to supply under CGST and SGST Act.
In view of Ruling at 1 above, the Applicant is not liable to pay CGST, SGST or IGST, as applicable.
In view of Ruling at 1 above, the Applicant is not required to get itself Registered under GST for the liaison activities.

Click here to download the ruling

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CA Deepak Gupta

Co Founder

CA Deepak Gupta,is Co-founder of Studycafe. He is Microsoft Office Specialist and Corporate Trainer of AI Tools, Microsoft Excel. He is Finance Influencer having more than 250K followers on Social Media. CA Deepak Gupta, is Having more than 14 plus years of experience, and he has Worked with best brands Like, Hero, Wipro, Ericsson before Starting Studycafe. He has Trained more than 20000 Persons in Microsoft Excel, PowerPoint, Power BI, Google Sheet, Google Forms and Other Tools.