TMI Blog2018 (8) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate office are in the nature of the employee-employer relationship. Further, since the corporate office and the units are distinct persons under the Act, there is no such relationship between the employees of one distinct entity with another distinct entity, at least as per the Goods and Service Tax Acts, even if they are belonging to the same legal entity. Further, the activities made between the related persons are treated as supplies and the valuation includes all costs, the employee cost also needs to be taken into consideration at the time of valuation of goods or services provided by one distinct entity to the other distinct entities. Ruling:- The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the CGST Act shall be treated as supply as per Entry 2 of Schedule I of the CGST Act. - Advance Ruling No. KAR ADRG 15 / 2018 - - - Dated:- 27-7-2018 - Sri. Harish Dharnia, Joint Commissioner of Central Tax, Member (Central Tax) And Dr. Ravi Prasad M.P. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST paid on certain expenses such as rent paid on immovable property and other equipments, travel expenses, consultancy services, communication expenses etc., which are incurred towards services used by the IMO are availed by the registered person in the state of Karnataka and subsequently, registered person in Karnataka is discharging IGST on the expenses proportionately attributable to the other units located outside the State of Karnataka treating the same as taxable supplies in this regard. c. The applicant provides an example on how the services are apportioned and the same reads as under If the Company has received rental services amount to ₹ 1,00,000 plus GST of ₹ 18,000, which are towards management office. The Company in Bangalore would avail the input tax credit to the extent of ₹ 18,000-00 and subsequently the Company, Bangalore would raise invoices on other units for an amount determined on the basis of turnover of respective unit to the total turnover of all the units in the said tax period and the applicable GST is discharged on the same. Assuming the turnover of Company, Pune is ₹ 10,00,000 and the total turnover of all units is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from where he renders his employment services. The employment relationship exists between the employee and employer, i.e. legal entity as a whole and not confined to the location of registered person from where the said employee renders services. When an employee renders any services to other registered persons, i.e. distinct persons of the same legal entity, the nature of activities still assumes the character of services by an employee to the employer in the course of or in relation to his employment as he is an employee for the legal entity as a whole and not for any one registered person. Hence, the services rendered by employees towards accounting and other administrative functions pertaining to other units still retains the character of services by an employee to the employer in the course of or in relation to his employment and hence shall not be treated as supply of services as per Entry 1 to Schedule III. Therefore, GST shall not be applicable on the said activities as the same is not a supply of services. 7. The applicant also states that certain services such as rent paid on immovable property, telephone services and business consultancy availed at the India Manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if made without consideration. 8.3 Clause (c) of sub-section (1) of Section 7 which is related to the scope of supply clearly states as under: (1) For the purposes of this Act, the expression supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. . . (b) . . . (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) . . . Hence any activities made between related persons made or agreed to be made without a consideration shall be covered under supply of goods or services. The valuation of such services is to be done as per the provisions of section 15 of the Central Goods and Services Tax Act, 2017 and if any consideration is charged by issue of invoice by the IMO to the respective units would amount to transfer and hence supply as it is in the course of business under clause (a) of sub-section (1) of section 7. Further, these activities made between the IMO and the separately registered units are not covere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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