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TMI BlogClarification 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.X X X X Extracts X X X X X X X X Extracts X X X X ..... f Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, GOI, New Delhi. Circular (No. 08/2023-24-GST) The Central Board of Indirect Taxes and Customs (CBIC) has issued the above referred circular. For the uniformity and in exercise of the powers conferred under Section 168 of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017) it is hereby directed that the Said Circular issued by the CBIC shall be applicable, mutatis mutandis, in implementation of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017). Copy of the referred CBIC Circular is attached herewith as Annexure. This Trade Circular is clarificatory in nature. Difficulty, if any, in implementation of this Circular may please be brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity which has Head Office (HO) located in State-1 and a 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 sub-section (4) of section 25 of the CGST Act are being clarified in the Table below: - Circular No. 199/11/2023-GST F. No. CBIC-20001/5/2023-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The issues that may arise with regard to taxability of supply of services between distinct persons in terms of sub-section (4) of section 25 of the CGST Act are being clarified in the Table below: - S.No Issues Clarification 1. Whether HO can avail the input tax credit (hereinafter referred to as ITC ) in respect of common input services procured from a third party but attributable to both HO and BOs or exclusively to one or more BOs, issue tax invoices under section 31 to the said BOs for the said input services and the BOs can then avail the ITC for the same or whether is it mandatory for the HO to follow the Input Service Distributor (herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocured 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 the said BO or have actually been provided to the said BO. Similarly, the HO can issue tax invoices under section 31 of CGST Act to the concerned BOs, in respect of any input services, procured by HO from a third party for on or behalf of a BO, only if the said services have actually been provided to the concerned BOs. 2. In respect of internally generated services, there may be cases where HO is providing certain services to the BOs for which full input tax credit is available to the concerned BOs. However, HO may not be issuing tax invoice to the concerned BOs with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 be the open market value of such services, irrespective of the fact whether cost of any particular component of such services, like employee cost etc., has been included or not in the value of the services in the invoice. Further, in such cases where full input tax credit is available to the recipient, if HO has not issued a tax invoice to the BO in respect of any particular services being rendered by HO to the said BO, the value of such services may be deemed to be declared as Nil by HO to BO, and may be deemed as open market value in terms of second proviso to rule 28 of CGST Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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