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TMI Blog2018 (6) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... rmission of RBI subject to various conditions. 1.2 The conditions of Indian Office of M/s. Habufa Meubelen B. V. are: a Except proposed liaison work, the office in India shall not undertake any activity of a trading, commercial or industrial nature nor shall it enter into any business contracts in its own name without RBIs prior permission. No commission/fees shall be charged or any other remuneration received/income earned by the office in India for the liaison activities/services rendered by it or otherwise in India. b The entire expenses of the office in India will be met exclusively out of funds received from abroad through normal banking channels c The office in India will not render any consultancy or any other services directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. HO is also responsible for payment of gratuity and other benefits of employees, etc. (B) ISSUE FOR DETERMINATION 2. The questions/issues before the Authority for Advance Ruling (AAR) for determination are: 2.1 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 ofs^ndce, especially when no consideration for any services is charged/paid. 2.2 Whether the applicant i.e. the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. 3.4 A perusal of definition of 'service' shows that to be a 'service' 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 concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead office as it amounts to service to one self. 3.7 The HO, Netherlands reimburses the other expenses incurred by the applicant for their operation The expenses are in the nature of salary, rent, security, electricity travelling etc. Since the applicant do not have any source of income it is dependent on the HO and all expenses incurred by the applicant are reimbursed by the HO For this reason also the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate person, 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. 3.8 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice 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 applicant, they are working as the Indian Office of M/s. Habufa Meubelen B.V. which is established as a Liaison O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial 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. 6.5 In view of the submissions made by the applicant and as discussed in above paras, when the applicant/liaison office is working as per the terms and conditions as mentioned under para 1.1 to 1.5 above, 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. Further, the kind of reimbursement claimed by them from their HO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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