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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 personsX X X X Extracts X X X X X X X X Extracts X X X X ..... vities performed by an office of an organisation in one State to the office of that organisation in another State. which are regarded as distinct persons under section 25 of the Delhi Good and Services Tax Act, 2017 (hereinafter referred to as the DGST Act ). The issues raised in the said representations have been examined and to ensure uniformity in the implementation of the law across the field formations, the Commissioner, in exercise of its powers conferred under section 168 of the DGST Act hereby clarifies the issue in succeeding paras. 2. Let us consider a business 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGST Rules, it is not mandatory for the HO to distribute such input tax credit by ISD mechanism. HO can also issue tax invoices under section 31 of the DGST Act to the concerned BOs in respect of common input services procured from a third party by HO but attributable to the said BOs and the BOs can then avail ITC on the same subject to the provisions of sections 16 and 17 of the DGST Act. In case, the HO distributes or wishes to distribute ITC to BOs in respect of such common input services through the ISD mechanism as per the provisions of section 20 of DGST Act read with rule 39 of the DGST Rules, HO is required to get itself registered mandatorily as an ISD in accordance with section 24(viii) of the DGST Act.Further, such distribution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 of DGST Rules, read with sub-section (4) of section 15 of DGST Act. As per clause (a) of rule 28, the value of supply of goods or services or both between distinct persons shall be the open market value of such supply. The second proviso to rule 28 of DGST Rules provides that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. Accordingly, in respect of supply of services by HO to BOs, the value of the said supply of services declared in the invoice by HO shall be deemed to be open market value of such services, if the recipient BO is eligible for full input tax credit.Accordingly, in cases where full input tax credit is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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