TMI Blog2018 (6) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... - ADVANCE RULING NO. RAJ/AAR/2018-19/05 - - - Dated:- 16-6-2018 - MR NITIN WAPA, MEMBER CENTRAL TAX AND MR SUDHIR SHARMA, MEMBER STATE TAX For The Applicant : Sh Keshav Malloo, CA (Authorised Representative) RULING (A) SUBMISSION OF APPLICANT: 1. M/s. Habufa Meubelen B.V. (hereby referred to as HO), is a company originally incorporated in Netherlands. 1.1 The applicant is the Indian Office of M/s. Habufa Meubelen B.V.(HO) which is established as a Liaison Office at C-36, Raghu Marg, Main Hanuman Nagar, Vaishali Nagar, Jaipur (Raj.) w.e.f. 18.12.2007, with the prior permission of RBI subject to various conditions. 1.2 The conditions of Indian Office of M/s. Habufa Meubelen B. V. are: a Except proposed liais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the clients with the HO and liaison office does not enter into any contract with the clients. Payments for the supplies are made by HO directly to the account of supplier and all the expenses incurred by liaison office is claimed from HO as per clear instructions of RBI. 1.4. The salaries of the employees are remitted by the HO to such office which further pay the same to the employees working there. The HO also reimburses the other expenses incurred by the office for their operation The expenses are in the nature of rent, security, electricity, travelling etc Since, the liaison office do not have any source of income it is dependent on the HO and all expenses incurred by such office are reimbursed by the HO. 1.5. There is no am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 3.3 Further services has been defined in Section 2(102) of the CGST Act, 2017 which says that services' means anything other than goods, money and securities but includes activities relating to the use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice in Netherlands. Therefore, they are not separate person. The liaison office as such is prohibited to undertake any other activity other than that those incidental and related to the liaising with the suppliers for quality control. The applicants are merely an executing arm of the head office and do not have resources to carry on the business activity. From this it can be safely concluded that the liaison office does not have independent existence of their own. Head office and the liaison office are the same entity and the liaison office do not have any entity of their own, thus there cannot be a flow of services inter-se the liaison office and head office as it amounts to service to one self. 3.7 The HO, Netherlands reimburses the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no requirement of getting registered under Section 22 Further, applicant is not falling under any of the category of persons specified under Section 24 for obtaining compulsory registration under the Act In view of the above interpretations of the provisions, applicant understands that they are not liable for obtaining registration under GST. (D) Issues to be decided: 4.1 Whether the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V.(HO) to the liaison office established in India is liable to GST as supply of service, especially when no consideration for any services is charged/paid. 4.2 Whether the applicant i.e. the Liaison Office is required to get registered under GST? 4.3 If it is assumed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HO. Therefore the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate persons, there cannot be any flow of services between them as one cannot provide service to self and therefore, the reimbursement of expenses made by the HO cannot be treated as a consideration towards any service. 6.3 The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services. 6.4 Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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