Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons. - GST - States - TRADE CIRCULAR No. 12/2023

Extract

..... raised in the said representations have been examined and to ensure uniformity in the implementation of the law across the field formations, the Commissioner, in exercise of his powers conferred under section 168 of the WBGST Act hereby clarifies the issue in succeeding paras. 2. Let us consider a business entity which has Head Office (HO) located in State-1 and branch offices (BOs) located in other States. The HO procures some input services e.g. security service for the entire organisation from a security agency (third party). HO also provides some other services on their own to branch offices (internally generated services). 3. The issues that may arise with regard to taxability of supply of services between distinct persons in terms of .....

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Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons. - GST - States

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..... espect of common input services procured from a third party by HO but attributable to the said BOs and the BOs can then avail ITC on the same subject to the provisions of section 16 and 17 of WBGST Act. In case, the HO distributes or wishes to distribute ITC to BOs in respect of such common input services through the ISD mechanism as per the provisions of section 20 of WBGST Act read with rule 39 of the WBGST Rules, HO is required to get itself registered mandatorily as an ISD in accordance with Section 24(viii) of the WBGST Act. Further, such distribution of the ITC in respect a common input services procured from a third party can be made by the HO to a BO through ISD mechanism only if the said input services are attributable to t .....

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..... or services or both between distinct persons shall be the open market value of such supply. The second proviso to rule 28 of WBGST Rules provides that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. Accordingly, in respect of supply of services by HO to BOs, the value of the said supply of services declared in the invoice by HO shall be deemed to be open market value of such services, if the recipient BO is eligible for full input tax credit . Accordingly, in cases where full input tax credit is available to a BO , the value declared on the invoice by HO to the said BO in respect of a supply of services shall be deemed to b .....

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