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TMI Blog2018 (7) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... r all the expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons. When the applicant/liaison office is working as per the terms and conditions as mentioned, the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V to the liaison office, is not liable to GST, as no consideration for any services is being charged by the liaison office. Whether the applicant i.e. the Liaison Office is required to get registered under GST? - If it is assumed that the reimbursement of expenses and salary claimed by liaison office is a consideration towards a service, then what will be the place of supply of such service? - Held that:- The liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service - As there are no taxable supplies made by the Liaison office, they are not required to get registered. Ruling:- If the liaison office in India does not render any consultancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees etc. of the branch/ office will be met or adequately provided for by HO. 1.3 The liaison office does not have any independent revenue or clients. The office has been established for the purpose of liasoning with the suppliers with regard to quality control of goods. The purchase order or contracts are entered 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 amount charged by liaison office from HO for any services. It seeks only reimbursement of salary and expenses incurred by it from HO. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; under GST law there has to be charging of separate consideration. If there is no separate consideration charged then it would not qualify as 'service'. Similarly, a perusal of definition of the term supply shows that consideration is one of the essential ingredients to be a supply. 3.5 Reading the definition of 'service' and 'supply' in harmony, a conclusion can be drawn that a supply of service can be liable to GST only if a separate consideration is charged If there is no consideration then it would not be liable to GST. In the present context, there is no consideration charged by applicant from the HO in foreign country for any services There is no amount received form HO except the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc., therefore the same is not a supply of service under GST law in absence of charging of consideration. 3.6 As mentioned in the facts itself that the liaison office does not have any independent revenue or clients. The office has been established for the purpose of liaising with the suppliers for quality control. Further the liaison office is set up only to represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the reimbursement of expenses and salary claimed by liaison office is a consideration towards a service, then what will be the place of supply of such service? (E) Personal Hearing: 5.1 Personal hearing in the matter was given to the applicant on 18/05/2018 wherein Mr. Keshav Malloo ,CA and authorised representative appeared on behalf of the applicant and he reiterated the submissions already made vide their Advance Ruling application dated 22/03/2018.He requested for decision on the case as per his submissions. (F) Findings: 6.1. As submitted by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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