No input tax credit: Intra-co services GST a pain
A recent advance ruling given by the Tamil Nadu bench in the case of Profisolutions, a private company, reaffirms that GST is applicable on services provided intra-company. In this case, the branch office in Chennai (Tamil Nadu) provided support services like engineering services, design services and accounting services to its head office in Bangalore, which was registered in Karnataka under the GST Act.: A recent advance ruling given by the Tamil Nadu bench in the case of Profisolutions, a private company, reaffirms that GST is applicable on services provided intra-company. In this case, the branch office in Chennai (Tamil Nadu) provided support services like engineering services, design services and accounting services to its head office in Bangalore, which was registered in Karnataka under the GST Act.
For GST to be triggered, there must be a 'supply' of goods or services. The moot question before the Authority for Advance Ruling (AAR) was whether provision of services by a branch office in one state to its head office in another state, through employees who are common to the company, constitutes a 'supply' of services
A physical presence of a unit, such as the head office or branch offices, necessitates a GST registration. In other words, the registrations are state-specific. The AAR held that each registered unit is a 'distinct person'. A transaction between distinct persons even without consideration is termed as a supply and is taxable. When the services of employees deployed in a registered place of business are provided to another registered premises of the company, it is treated as a supply and is subject to GST at 18%.
This concurs with advance rulings given in the past, including a ruling given by the Karnataka bench of the Appellate Authority for Advance Rulings in the case of Columbia Asia Hospitals.